Demerit: Finding that the single-part tariff, particularly for Central generating stations, was conducive neither to economic generation of power as per merit-order, nor to satisfactory operation of the regional grids, the government of India adopted in 1992 a two-part tariff formula for NTPC stations based on the recommendations of the KP Rao Committee.

In the year 1994, M/s ECC of USA were commissioned under a grant from the Asian Development Bank to undertake a comprehensive study of the Indian power system and recommend a suitable tariff structure.

ECC submitted their report in February, 1994, recommending Availability Tariff for generating stations, which was accepted in principle by GOI in November, 1994.

A National Task Force (NTF) was constituted by the Ministry of Power in February, 1995 to oversee the implementation of ECC's recommendations.

[11] With the spirit of the Electricity Regulatory Commissions Act 1998 and consequent upon transfer of relevant powers vested under section 43 A (2) of the Electricity (Supply) Act 1948 to the CERC with effect from 15 May 1999, GOI forwarded the above draft ABT notification to CERC vide OM dated 31.5.1999 for finalization after due deliberation.

The ABT order dated 4 January 2000 of the Commission departs significantly from the draft notification as also from the prevailing tariff design Tariff for supply of electricity shall comprise two parts: The annual fixed cost (AFC) of a generating station or a transmission system shall consist of the following components[12] The Energy charge shall cover the primary fuel cost and limestone consumption cost (where applicable), and shall be payable by every beneficiary for the total energy scheduled to be supplied to such beneficiary with fuel and limestone price adjustment Appellate Tribunal for Electricity has been established by Central Government for those who are not satisfied with the Central Electricity Regulatory Commission order or with a state.

Whereas SERC's primary function was to determine bulk and retail tariffs to be charged to customers, regulate the operations of intrastate transmission, including those of the State Load Despatch Center (SLDC).

During Parliamentary Standing Committee on Energy in the year 2001,[15] SERC being established in states, for formulating standards relating to quality, continuity and reliability of service for the electricity industry have failed in their efforts.