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Informist, Friday, May 8, 2026

 

NEW DELHI – The Supreme Court Friday held that Indian Railways was not a deemed distribution licensee under the Electricity Act and was liable to pay cross-subsidy surcharge and additional surcharge to distribution licensees for availing open access to get power supply. The top court noted that Indian Railways' claim to be treated as a deemed distribution licensee was merely to circumvent the obligation of payment of the cross-subsidy surcharge and to evade the corresponding statutory and regulatory obligations with respect to a distribution licensee. 

 

The top court directed various state power regulators and distribution companies to compute the cross-subsidy surcharge and additional surcharge to be levied on Indian Railways. They should give Indian Railways a reasonable opportunity to respond to these calculations so they can contest them. 

 

The Indian Railways is a consumer as it purchases electricity exclusively for its own use and supplies it to no one but its own constituents, the court said. Thus, like any other consumer, Indian Railways is subject to the cross-subsidy surcharge and additional surcharge. When high-volume, high-revenue consumers such as the Indian Railways choose to procure electricity through open-access, distribution licensees may be left with underutilised infrastructure and power purchase commitments, leading to financial strain, a bench of Justice Dipankar Datta and Justice Satish Chandra Sharma said. 

 

The top court noted that the cross-subsidy surcharge is levied on open-access consumers to offset the revenue shortfall experienced by distribution licensees in providing subsidised tariffs. The financial burden is equitably shared across consumer categories instead of burdening the existing consumer base, the court said. 

 

 

Indian Railways had approached the Central Electricity Regulatory Commission seeking the grant of open access to procure power from generating stations through the inter-state and intra-state transmission systems. Indian Railways sought that non-discriminatory open access be granted to it without the obligation to pay the cross-subsidy surcharge and the additional surcharge under the Electricity Act.

 

Contesting this, various state distribution companies and power regulators said that the statutory framework under the Railways Act only empowers Indian Railways to consume electricity for its own use and does not extend to supplying electricity to consumers. The companies said that the Centre's legislative proposal in the Draft Electricity Amendment Bill to reduce the cross-subsidy surcharge for the Indian Railways itself indicates that no such provision or privilege exists under the current statute that absolves them from payment of these charges.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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