Power bills may rise in new tariff regime

Index-linked tariff revisions likely if state regulators fail to act

- Rituraj Baruah

Electricity bills for consumers across India could begin rising automatically every year starting next fiscal, regardless of political reluctance at the state level.

The Union power ministry has proposed index-linked tariff revisions in its draft National Electricity Policy (NEP) released on Wednesday, under which tariffs will reflect costs if state electricity regulatory commissions (SERCs) fail to act. The nature and methodology of the index will have to be devised by the SERCs under the draft policy.

Further, the NEP said an increase in power purchase cost—by distribution companies or discoms— must be automatically passed to consumers on a monthly basis. The ministry has recommended setting up stabilization funds by discoms to manage power purchase cost fluctuations. This would potentially imply even higher bills for consumers every month.

The ministry has sought responses from all stakeholders including discoms, regulators, state governments and consumer groups, on the draft policy, within 30 days.

To be sure, electricity is a concurrent subject, with tariffs determined by SERCs, but irregular revisions have contributed to financial stress at distribution companies. According to data from the power ministry, 15.04% of electricity supply turned into losses-technically called aggregate technical and commercial (ATC) losses in FY25.