Cross-subsidy surchargeCSS

Indian utility tariffs charge industrial and commercial consumers above the cost of supplying them, and use the margin to keep tariffs low for farmers and households. When a large consumer leaves for open access, the utility loses that margin. The Electricity Act lets the state commission recover it with a surcharge on open-access consumption. The commission sets it each year in its tariff order, in ₹/kWh, by consumer category and voltage.

National tariff policy gives a formula. The surcharge is broadly the tariff the consumer would have paid minus the utility's cost of supplying it, and it is capped at a share of that tariff. In practice, states arrive at different figures from similar inputs. The consumer pays it on every open-access kWh, through the utility. Captive users are exempt by law, and some states exempt particular categories of renewable supply.

The surcharge is often the largest single charge in the landed cost of open-access power, and the one most likely to move. A buyer's saving depends on its level over the whole contract, so its trend across past tariff orders matters as much as today's figure. Developers price PPAs to leave room for it. Many structure supply as captive or group captive to avoid it.

The surcharge is an Indian mechanism tied to cross-subsidised retail tariffs. Some US states with retail choice levy non-bypassable charges on departing customers for costs the utility has already incurred, such as California's power charge indifference adjustment. In Europe, consumers switch supplier freely, and policy costs and network charges sit in every bill whoever the supplier is, so there is no equivalent exit charge.