12.(1) The State Government
shall have the power to issue policy directives on matters concerning electricity in the
State including the overall planning and coordination and all such policy directives shall
be consistent with the objects sought to be achieved by this Act.
(2) If any dispute arises between the Commission
and the State Government as to whether a question is or is not a question of policy, it
shall be referred to the Central Electricity Authority whose decision thereon shall be
final and binding and for this purpose the Central Electricity Authority may appoint one
or more of its members to act on behalf of the said authority.
(3) The State Government shall be entitled
to issue policy directives concerning the subsidies to be allowed for supply of
electricity to any class or classes of persons or in respect of any area in addition to
the subsidies permitted by the Commission while regulating and approving the tariff
structure:
Provided that the State Government shall pay the amount to compensate any concerned
body or unit affected by the grant of subsidies by the State Government to the extent the
subsidies granted.