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14. The National Electricity Policy notified by the Central Government provides as under:
"5.5.1. There is an urgent need for ensuring recovery of cost of service from consumers to make the power sector sustainable".
"5.5.3. Over the last few decades cross-subsidies have increased to unsustainable levels. Cross- subsidies hide inefficiencies and losses in operations. There is urgent need to correct this imbalance without giving tariff shock to consumers. The existing cross-subsidies for other categories of Appeal Nos. 102,103 & 112 of 2010 consumers would need to be reduced progressively and gradually".

Thus, the policy provides for progressive and gradual reduction of the cross-subsidies of the subsidizing consumers, without giving tariff shock to the subsidized consumers.

15. The State Commission's Tariff Regulations of 2004 refer to computation of cross subsidy with reference to determination of surcharge. The relevant section is reproduced below:

"7. Tariff Principles
(a) .................
(b) .........................
(c) Surcharge

19. The National Electricity Policy provides for reducing the cross subsidies progressively and gradually. The gradual reduction is envisaged to avoid tariff shock to the subsidized categories of consumers. It also provides for subsidized tariff for consumers below poverty line for minimum level of support. Cross subsidy for such categories of consumers has to be necessarily provided by the subsidizing consumers.

20. The Tariff Policy clearly stipulates that for achieving the objective that the tariff progressively reflects the cost of supply of electricity, latest by the end of the year 2010-11, the tariffs should be within ±20% of the average cost of supply, for which the State Commission would notify a road-map. The road map Appeal Nos. 102,103 & 112 of 2010 would also have intermediate milestones for reduction of cross subsidy.

vi) The tariffs can be differentiated according to the consumer's load factor, power factor, voltage, total consumption of electricity during specified period or the time or the geographical location, the nature of supply and the purpose for which electricity is required.

Thus, if the cross subsidy calculated on the basis of cost of supply to the consumer category is not increased but reduced gradually, the tariff of consumer categories is within ±20% of the average cost of supply except the consumers below the poverty line, tariffs of different categories of consumers are differentiated only according to the factors given in Appeal Nos. 102,103 & 112 of 2010 Section 62(3) and there is no tariff shock to any category of consumer, no prejudice would have been caused to any category of consumers with regard to the issues of cross subsidy and cost of supply raised in this appeal.