law: Electricity Regulatory Commissions Act, 1998 
  29. Determination of tariff by State Commission 
  (1) Notwithstanding anything contained in any other law, the
  
  tariff for intra-State transmission of electricity and the tariff for supply of
  
  electricity, grid, wholesale, bulk or retail, as the case may be, in a State
  
  (hereinafter referred to as the "tariff", shall be subject to the
  
  provisions of this Act and the tariff shall be determined by the State
  
  Commission of that State in accordance with the provisions of this Act.
  (2) The State Commission shall determine by regulations the
  
  terms and conditions for the fixation of tariff, and in doing so, shall be
  
  guided by the following, namely:- 
  (a) the principles and their applications
  
  provided in sections 46, 57 and 57A of the Electricity (Supply) Act, 1948 and
  
  the Sixth Schedule thereto;
  (b) in the case of the Board or its successor
  
  entities, the principles under section 59 of the Electricity (Supply) Act,
  
  1948;
  (c) that the tariff progressively reflects the
  
  cost of supply of electricity at an adequate and improving level of efficiency;
  
  
  (d) the factors which would encourage
  
  efficiency, economical use of the resources, good performance, optimum
  
  investments, and other matters which the State Commission considers appropriate
  
  for the purposes of this Act;
  (e) the interests of the consumers are
  
  safeguarded and at the same time, the consumers pay for the use of electricity
  
  in a reasonable manner based on the average cost of supply of energy;
  (f) the electricity generation, transmission,
  
  distribution and supply are conducted on commercial principles,
  (g) national power plans formulated by the
  
  Central Government.
  (3) The State Commission, while determining the tariff under this
  
  Act, shall not show undue preference to any consumer of electricity, but may
  
  differentiate according to the consumer's load factor, power factor, total
  
  consumption of energy during any specified period or the time at which the
  
  supply is required or the geographical position of any area, the nature of
  
  supply and the purpose for which the supply is required.
  (4) The holder of each license and other persons including the
  
  Board or its successor body authorized to transmit, sell, distribute or supply
  
  electricity wholesale, bulk or retail, in the State shall observe the
  
  methodologies and procedures specified by the State Commission from time to
  
  time in calculating the expected revenue from charges which he is permitted to
  
  recover and in determining tariffs to collect those revenues.
  (5) If the State Government requires the grant of any subsidy to
  
  any consumer or class of consumers in the tariff determined by the State
  
  Commission under this section, the State Government shall pay the amount to
  
  compensate the person affected by the grant of subsidy in the manner the State
  
  Commission may direct, as a condition for the license or any other person
  
  concerned to implement the subsidy provided for by the State Government.
  (6) Notwithstanding anything contained in sections 57A and 57B
  
  of the Electricity (Supply) Act, 1948 no rating committee shall be constituted
  
  after the date of commencement of this Act and the Commission shall secure that
  
  the licensees comply with the provisions of their license regarding the charges
  
  for the sale of electricity both wholesale and retail and for connections and
  
  use of their assets or systems in accordance with the provisions of this Act.