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<p>DERC has issued an Approach Paper on Tariff Rationalization to examine the existing regulatory framework in electricity retail tariff and develop a strategy for creating competition in market within the present legal frame work of the Electricity Act, 2003. The paper refers to MoP Consultation Paper on Issues Pertaining to Open Access and suggests way forward on the issues highlighted in the MoP paper. The paper suggests the following:</p> <p>Cross Subsidy: The Fixed charges and Energy charges should be adjusted gradually, say over a period of three to five years, so as to make the retail tariff reflective of the actual Fixed Cost. This will compensate the unrecovered portion of Fixed Charges&rsquo; of retail tariff to avoid additional burden on the consumers of the existing distribution licensees.</p> <p>Carriage and Content Business: Total distribution cost of existing distribution licensee should be split into carriage &amp; content based on actual expenditure incurred by the Distribution Licensee in the form of Actual Fixed Cost &amp; Actual Variable Cost, in line with the proposed amendment in Electricity (Amendment) Bill, 2014.</p>