The Punjab State Electricity Regulatory Commission (PSERC) has reduced electricity tariffs across consumer categories for the financial year (FY) 2026-27 after determining that the distribution utility will have a surplus of ₹78.5 billion (~$850 million).

The revised tariffs will be in force from April 1, 2026, to March 31, 2027.

In its order, the Commission fixed the Aggregate Revenue Requirement (ARR), subsidies, generation charges, and network charges for Punjab State Power Corporation (PSPCL) and other utilities.

The Commission determined the net revenue requirement for FY 2026-27 at ₹489.96 billion (~$5.32 billion), while the revenue expected from existing tariffs was assessed at ₹527.91 billion (~$5.73 billion), resulting in a surplus of ₹37.95 billion (~$410 million) for the year.

After accounting for cumulative adjustments and past gaps, the Commission calculated an overall surplus of ₹78.52 billion (~$850 million) through FY 2026-27. Accordingly, the ARR to be recovered through tariff was determined at ₹449.4 billion (~$4.88 billion).

The average cost of supply (ACoS) was calculated at ₹6.15 (~$0.066)/kWh based on projected energy sales of 73,065 million kWh. Based on these findings, the Commission reduced tariffs across all consumer categories while ensuring that cross-subsidy levels remain within the ±20% limits prescribed under tariff policy guidelines.

Tariff Revisions

For domestic supply up to 2 kW, the tariff up to 300 units has been reduced from ₹5.40 (~$0.058)/kWh to ₹3.85 (~$0.041)/kWh, while the rate for above 300 units has been reduced from ₹7.75 (~$0.084)/kWh to ₹7.05 (~$0.076)/kWh.

For non-residential supply, the tariff up to 500 units has been reduced from ₹6.89 (~$0.074)/kWh to ₹6.10 (~$0.066)/kWh. The tariff for above 500 units has been reduced from ₹7.75 (~$0.084)/kWh to ₹7.10 (~$0.077)/kWh.

In the industrial category, fixed charges for small power consumers have been reduced from ₹110 (~$1.19)/kVA to ₹100 (~$1.085)/kVA, while energy charges have been reduced from ₹5.82 (~$0.063)/kVAh to ₹5.70 (~$0.061)/kVAh.

For medium supply consumers, fixed charges have been reduced from ₹145 (~$1.57)/kVAh to ₹130 (~$1.41)/kVAh, and energy charges from ₹6.25 (~$0.067)/kVAh to ₹5.83 (~$0.063)/kVAh. Energy charges for large supply consumers were also reduced across categories.

The tariff for electric vehicle charging stations has been reduced from ₹6.28 (~$0.068)kVAh to ₹5 (~$0.054)/kVAh. Agricultural pump set tariffs have been reduced from ₹6.70 (~$0.072)/kVAh to ₹5.38 (~$0.058)/kVAh, or from ₹492 (~$5.33)/BHP/month to ₹395 (~$4.28)/BHP/month.

Subsidy Obligations

The Commission determined that a subsidy of ₹152.01 billion (~$1.65 billion) is payable by the government in FY 2026-27 to cover categories such as agricultural consumers, domestic consumers receiving free units, and industry under concessional tariffs.

When legacy dues and pending payments are included, the total projected subsidy payable by the state government amounts to ₹263.10 billion (~$2.86 billion), which is to be paid in quarterly instalments of ₹65.78 billion (~$710 million).

The Commission noted delays in subsidy payments and observed that the state government released ₹188.77 billion (~$2.05 billion) during FY 2025-26. Due to payment delays, an interest of ₹8.19 billion (~$88.9 million) was imposed. As a result, the total subsidy dues, including interest, reached ₹299.87 billion (~$3.25 billion), leaving a shortfall of ₹111.10 billion (~$1.21 billion) as of March 31, 2026.

The Commission directed that subsidy payments must be made quarterly in advance and that pending dues should be cleared, with compliance to be reviewed during the true-up process.

Generation and Network Charges

The Commission also determined generation charges for state-owned plants. Annual fixed charges for thermal generating stations were set at ₹5.59 billion (~$60.7 million), while hydel stations were assigned ₹4.04 billion (~$43.8 million), representing 50% of the approved amount.

Energy charges for thermal plants were determined at ₹3.89 (~$0.042)/kWh for Guru Gobind Singh Super Thermal Plant and ₹3.86 (~$0.041)/kWh for Guru Hargobind Thermal Plant.

For network operations, wheeling charges were set at ₹619.72 (~$6.72)/MWh or ₹254,092 (~$2,757.52)/MW/month. Cross-subsidy surcharge was determined at ₹0.86 (~$0.0093)/kWh for large supply consumers and ₹1.22 (~$0.013)/kWh for non-residential consumers, while the surcharge for domestic consumers was set at nil.

For Punjab State Transmission Corporation (PSTCL), the Commission determined a total ARR of ₹16.77 billion (~$182 million), comprising ₹116.52 billion (~$179.3 million) for transmission operations and ₹249.5 million (~$2.71 million) for State Load Dispatch Centre activities. Monthly transmission charges were fixed at ₹1.38 billion (~$15 million), and SLDC charges at ₹20.79 million (~$220,000).

Feed-in Tariff for Rooftop Solar

The Commission continued the feed-in tariff for rooftop solar power at ₹2.97 (~$0.032)/kWh for FY 2026-27 due to the absence of tariffs discovered through competitive bidding. It also determined an incremental green energy tariff of ₹0.15 (~$0.0016)/kWh or ₹0.075 (~$0.0008)/kWh, with green attributes transferred to the distribution utility to meet the renewable purchase obligation.

While evaluating the green tariff, the Commission ruled that administrative costs should not be included, stating that procurement and billing activities are routine functions of the utility and that the tariff should reflect only the incremental cost of renewable power procurement over conventional sources.

The Commission also accepted PSPCL’s proposal to increase the load limit for small power consumers from 20 kVA to 50 kVA to facilitate the expansion of small businesses and improve the utilization of distribution infrastructure.

Recently, PSERC issued the draft Punjab State Electricity Regulatory Commission (Grid Interactive Rooftop Solar Photo Voltaic Systems) (Third Amendment) Regulations, 2026, seeking to significantly liberalize the state’s rooftop solar framework.

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