Himachal Pradesh Reduces Subsidies Offered to Domestic Power Consumers


The Himachal Pradesh Electricity Regulatory Commission (HPERC) has reduced the subsidies offered to domestic power consumers by increasing the effective tariffs.

The revised tariffs provide clarity on the tariffs determined in its wheeling and retail tariff order for the Himachal Pradesh State Electricity Board Limited (HPSEBL) issued earlier.

The Commission explained that previously, the tariff was based on the ₹4.8 billion (~$64.3 million) provision allocated for subsidies to agricultural and domestic electricity consumers, as decided by the state government in its budget for 2020-21.

However, the State Electricity Board subsequently decided to reduce the subsidy rates for domestic consumers. The HPERC explained that these revisions lacked clarity and asked the board to address these issues. The Himachal Pradesh State Electricity Board, in its subsequent letters, addressed the Commission’s observations.

Under the provisions of the Electricity Act, 2003, the Commission revised its subsidized tariff for domestic consumers. The revised tariff will apply, starting July 1, 2020. The Commission noted that the tariffs for this category of consumers from June 1, 2020, to June 30, 2020, will remain unchanged. The tariff for lifeline consumers (consumers with a contracted load of 1 kW and energy consumption of up to 50 kWh/month) and consumers of up to 150 kWh/month remains unchanged.

The effective tariff after subsidy reduction for domestic consumers of 126-300/kWh per month,including pre-paid consumers, has increased by 34% due to this new revision.

The revised subsidized tariffs are as follows:

Himachal Pradesh Subsidized Tariff

The Commission said that if the state government or the HPSEBL wanted to change the rate of subsidies for these consumers in the future, they must inform the Commission accordingly. It noted that the revised tariffs will apply retrospectively starting July 1, 2020, and that the HPSEBL will adjust bills based on the modified subsidy amounts.

Further, the Commission also ordered for subsidy amounts to be paid in advance to the HPSEBL, as per the provisions of the Electricity Act, 2003, and be reconciled at the end of every quarter. It also directed the HPSEBL to submit quarterly reports covering subsidy payments as well as outstanding amounts, if any.

In January, the HPERC issued the generic levelized tariffs for solar PV projects for the last six months of the financial year 2019-20.

More recently, the HPERC issued an order for distribution companies in the state fortheir renewable purchase obligation backlogs up to the financial year 2020.

Earlier, the state finalized the amendments to its regulation on the deviation settlement mechanism. The state commission had proposed the amendments in May 2019 and had provided stakeholders with 30 days to revert with their comments and suggestions.