Tripura is a land locked state in the Northeast India which shares borders with states of Assam and Mizoram and international boundary with Bangladesh. The state is divided into four (4) administrative districts- North Tripura, West Tripura, South Tripura and Dhalai. The state has a population of 36.71 lakhs according to 2011 census and spread over 10,490 sq km. Although Tripura is the 2nd smallest state in India, it is the 2nd most populous state and has the 2nd highest population density in the north east region(NER)1. The per capita income in the state stands around Rs 36000 in comparison to national average of around Rs 54500. About 83 % of the state's population lives in rural areas. Agriculture and allied activities form the backbone of the economy of Tripura and employ about 64% of the population.
In accordance with Memorandum of Understanding (MOU) between Ministry of Power (MoP), Government of India (GoI) and Government of Tripura (GoT) in August 2003, GoT has introduced reforms and restructured the power sector in the state with objectives of creating the conditions for the sustainable development of the sector and improving the efficiency of services. Tripura Electricity Regulatory Commission (TERC) was established on 31st May 2004 by the GoT as a statutory body and as one man Commission under Section 17 of the Electricity Regulatory Commissions Act, 1998 (14 of 1998) a Central Act which was superseded by the Section 82 of Electricity Act, 2003 . Tripura is the 2nd state in the NER to constitute a State Electricity Regulatory Commission.
Also, Department of Power (DoP), GoT has been corporatized and Tripura State Electricity Corporation Limited (TSECL) has been formed and started operation from 1st January 2005. As per Electricity Act' 2003 TSECL is considered as a deemed Licensee who is responsible for generation, transmission and distribution of Power in Tripura. TSECL is mandated to get its tariff and annual revenue requirement (ARR) approved by TERC.
Since its inception, TSECL has secured last tariff revision for 2005-06 and 2006-07 which resulted in constant tariff rates since 2006-07. However, increasing gas costs have increased power procurement costs for TSECL in two-fold ways: Adjusting fuel cost of their own generation as well procurement from central sector gas-based generating stations. In response to this, TSECL has claimed for an increase of Rs 2.09 per unit per consumer as Fuel and Power Purchase Cost Adjustment (FPPCA); however, TERC has granted only Rs 1.40 per unit per consumer w.e.f 1st September 2010. The same has been adjusted against certain slabs of Domestic and Commercial categories after considering grant of Rs 11 crore from GoT. Further, TSECL has appointed PricewaterhouseCoopers Pvt. Ltd.(PwC) as a consultant for providing assistance in preparation of ARR for the period of FY 2007-08 to FY 2012-13 for filing Tariff Petition before TERC.