Union Power Minister Calls on Regulators to Ensure Cost-Reflective Tariffs

Electricity regulators were urged to comply with consumer rights rules


In a recent interaction with regulatory bodies from across the country, Union Minister for Power and New & Renewable Energy R.K. Singh emphasized the need for cost-reflective tariffs and compliance with the Electricity (Rights of Consumers) Rules.

The meeting discussed crucial aspects of India’s power sector and the role of regulatory commissions.

One of the central points raised by the Minister was the necessity for regulators to ensure that tariffs cover the entire cost of services provided by distribution companies (DISCOMs).

He recalled the government’s decision to make energy audits mandatory, a move designed to identify areas of power leakage and theft, ultimately reducing Aggregate Technical and Commercial (AT&C) losses.

He also stressed that the trajectories set for AT&C loss reduction should be realistic to ensure attainable goals.

Singh also highlighted the importance of implementing pre-paid meters nationwide. This initiative is expected to enhance billing and collection efficiency for DISCOMs, ultimately contributing to their financial well-being and reducing their working capital requirements due to upfront payments by consumers.

Regarding subsidies, the Minister pointed out that while it is the prerogative of state governments to decide on subsidies for specific consumer categories, it is the responsibility of state commissions to ensure that DISCOMs receive the subsidies allocated by the state government. He reiterated that electricity is not free and must be paid for.

The Minister observed that since the previous meeting in October 2022, significant progress has been made in various areas, including the timely issuance of tariff and true-up orders for distribution companies, transmission licensees, and generating utilities.

Singh highlighted the importance of these developments in achieving cost-reflective tariffs, which are essential for the financial sustainability of the power sector.

While commending the regulators for their efforts to improve the functioning of the power system, the Minister expressed concern about the growing backlog of cases in some commissions and urged them to prioritize the resolution of long-pending cases.

Singh emphasized that the country’s development is contingent on a consistent and uninterrupted power supply, 24×7. He highlighted that one of the key differentiators between developed and developing/under-developed countries is the presence of load shedding and blackouts in the latter category.

To address this issue, he drew attention to the Electricity (Rights of Consumers) Rules, which provide for penalties for gratuitous load shedding, and urged their strict implementation.

In August 2023, the Ministry of Power amended the Electricity Rules 2005, introducing measures to streamline states’ accounting, reporting, billing, and subsidy payments to the DISCOMs.

In January this year, Singh advised states to ensure that no penalty is levied on any consumer for higher load discovered after the installation of prepaid smart meters. He asserted that the billing for consumers who have installed prepaid smart meters be done on an actual load basis.