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					</table>The Rajasthan Electricity Regulatory Commission (<a href="https://rerc.rajasthan.gov.in/" target="_blank" rel="noopener">RERC</a>) has approved an aggregate revenue requirement (ARR) of ₹356.6 million (~$3.9 million) for the State Load Despatch Centre (SLDC) for the financial year (FY) 2026–27. This amount is lower than the ₹477.7 million (~$5.2 million) requested in the petition.
The approved charges are ₹1.4426/kW/month for state distribution companies and long- and medium-term open access customers. The charge for short-term open access transactions is ₹0.0474/kW/day.
The tariff will be applicable from April 1, 2026, to March 31, 2027, and will continue provisionally thereafter until the Commission issues the next order. For short-term open access transactions, no retrospective adjustment of SLDC charges will apply.
The Commission also completed the true-up of accounts for FY 2024–25 based on audited financial data. It approved an ARR of ₹289.6 million (~$3.2 million) against revenue of ₹305.4 million (~$3.3 million), resulting in a surplus of ₹15.8 million (~$172,000).
In a separate order on the investment plan for FY 2026–27, the Commission approved capital investment of ₹6.3 million (~$68,500) against the ₹100 million (~$1.1 million) proposed by the petitioner.
The regulator declined to rule on return on equity at this stage because government approval was not submitted. The order states that return on equity may be considered at the time of true-up if the required approval is produced.
Background
The Rajasthan State Load Despatch Centre filed a petition on December 4, 2025, seeking approval of the true-up for FY 2024–25, as well as the annual revenue requirement and SLDC charges for FY 2026–27. The petition was filed under the Electricity Act 2003 and the applicable RERC Tariff Regulations.
The Commission communicated several data gaps and deficiencies to the petitioner, and additional information was subsequently submitted. Hearings were conducted on January 22, 2026, and February 18, 2026, after which the order was reserved.
The petitioner proposed a total ARR of ₹477.7 million (~$5.2 million) for FY 2026–27. The filing included claims for operation and maintenance expenses, RLDC fees, interest on working capital, depreciation, interest on term loans, and return on equity.
The petitioner also projected a peak demand of 22,212 MW for FY 2026–27 to determine SLDC charges.
Stakeholders raised several issues during the consultation process. These included concerns regarding the recovery of return on equity without government approval, questions about whether certain expenditures should be treated as capital expenditure or operation and maintenance expenses, and observations regarding the utilisation of previously approved investment programs. Concerns were also raised regarding SLDC&#8217;s institutional independence from the state transmission utility.
In a separate petition, the SLDC sought approval for a ₹100 million (~$1.1 million) capital investment plan for FY 2026–27. The proposal included the establishment of a Security Operation Centre and Network Operation Centre, installation of automatic power factor correction panels at the Heerapura facility, and certain infrastructure augmentation works.
Commission’s Analysis
While determining the ARR for FY 2026–27, the Commission examined each component of the revenue requirement claimed by the petitioner. After prudence checks the Commission approved operation and maintenance expenses of ₹246.4 million (~$2.7 million), RLDC fees of ₹86.9 million (~$945,000), interest on working capital of ₹11.9 million (~$129,000), depreciation of ₹14.4 million (~$157,000), and interest on term loans and finance charges of ₹5.4 million (~$58,700). The Commission also considered the non-tariff income of ₹8.4 million (~$91,400) while determining the revenue requirement.
The Commission did not allow the claim for return on equity because government approval was not submitted in this case. It stated that the matter could be considered during the true-up if the required approval is obtained.
In determining SLDC charges, the Commission examined the demand projections submitted by the petitioner. The petitioner projected a peak demand of 22,212 MW for FY2026–27. The Commission noted that the actual peak demand achieved to date of filing in FY2025–26 was 19,617 MW. After applying a 5% escalation, it considered 20,598 MW as the contracted capacity for tariff calculation.
The Commission also carried out the true-up of accounts for FY 2024–25 in accordance with the applicable tariff regulations using audited financial data. Based on this analysis, it approved an ARR of ₹289.6 million (~$3.2 million) against revenue of ₹305.4 million (~$3.3 million), resulting in a revenue surplus of ₹15.8 million (~$172,000).
In the separate investment approval proceeding, the Commission examined the proposed capital investment programs for FY 2026–27. The petitioner had proposed an investment plan of ₹100 million (~$1.1 million) that included ₹88.2 million (~$960,000) for establishing a Security Operation Centre and Network Operation Centre, ₹1.8 million (~$19,600) for automatic power factor correction panels at the SLDC facility, and ₹10 million (~$108,800) for infrastructure augmentation works.
The Commission approved ₹6.3 million (~$68,500) of the proposed investments. This includes ₹1.8 million (~$19,600) for the installation of automatic power factor correction panels and ₹4.5
The Commission directed that if actual investment under any approved program exceeds the approved amount, the SLDC must justify it. It also granted in-principle approval for the hypothecation of assets created under the approved programs to secure loans, and directed the SLDC to submit copies of the hypothecation agreements within one month of execution.
The Commission recently <a href="https://www.mercomindia.com/rajasthan-electricity-regulator-issues-draft-resource-adequacy-regulations/" target="_blank" rel="noopener">issued</a> the draft Framework for Resource Adequacy Regulations, 2026, proposing a structured mechanism for resource adequacy planning to support future power security in the state.
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Rajasthan Approves ₹356 Million Aggregate Revenue Requirement for SLDC

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					</table>The Punjab State Electricity Regulatory Commission (<a href="https://pserc.punjab.gov.in/" target="_blank" rel="noopener">PSERC</a>) 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 (<a href="https://pspcl.in/" target="_blank" rel="noopener">PSPCL</a>) 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.
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2.png"><img loading="lazy" decoding="async" class="aligncenter wp-image-91716 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2.png" alt="Punjab: Electricity Tariff for Commercial and Industrial Consumers for Financial Year 2027" width="876" height="304" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2.png 876w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2-300x104.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2-768x267.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2-650x226.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2-624x217.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2026/03/PSERC-table-2-600x208.png 600w" sizes="auto, (max-width: 876px) 100vw, 876px" /></a>
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 industrial consumers with a connected load of 100 kVA to 1,000 kVA, the Commission set demand charges at ₹210 (~$2.28)/kVA, while the energy charge was set at ₹6.60 (~$0.07)/kVAh for all units, compared to ₹5.90 (~$0.06)/kVAh earlier.
For industries with a load above 1,000 kVA, the demand charge remains ₹280 (~$3.04)/kVA, while the energy charge has been set at ₹6.70 (~$0.072)/kVAh for all units, as against the previous tariff of ₹6 (~$0.065)/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.
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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).
Transmission Charges
The tariff order also sets the open access transmission charges for FY 2026-27, based on the approved revenue requirement of the transmission business. The Commission approved a revenue requirement of ₹16.5 billion (~$179.07 million) for the transmission segment, calculated against a net transmission system capacity of 15,209.87 MW.
Based on these parameters, the transmission charges for long-term and medium-term open-access customers have been determined at ₹90,514.14 (~$984)/MW/month.
For short-term open access customers, the regulator fixed the transmission charge at ₹205.84 (~$2.23)/MWh, based on 80,259 MkWh of energy input at the transmission boundary, as approved in the PSPCL tariff order for FY 2026–27.
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 <a href="https://www.mercomindia.com/punjabs-draft-amendments-aim-to-liberalize-rooftop-solar-framework" target="_blank" rel="noopener">issued</a> 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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Punjab Cuts Power Tariffs for FY 2027 as ₹78.5 Billion Surplus Emerges

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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has issued the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2024, to enhance transparency in financial disclosures and bolster regulatory compliance for power distribution companies (DISCOMs).
The rules aim to enable DISCOMs to clearly demarcate revenue, receivables, and subsidies for better financial clarity. This will also allow investors, regulators, and the public to assess distribution entities&#8217; fiscal health better.
The rules ensure that entities are financially safeguarded against long-term defaults by mandating provisions for receivables and enforcing the reporting of trade receivable days.
The Average Cost of Supply (ACS), Average Revenue Realized (ARR) gap, and Aggregate Technical and Commercial (AT&amp;C) loss metrics will play critical roles in policy formulation and monitoring, as these data points directly impact tariffs and financial sustainability.
The 2024 rules mandate that all DISCOMs—excluding government departments, boards, and corporations that are deemed licensees under section 14 of the Electricity Act—adopt a new reporting structure.
The rules emphasize accountability through comprehensive financial statements and additional disclosure requirements, aligning with Sections 129 and 176 of the Companies Act, 2013.
The rules outline that entities must recognize only the revenue approved within tariff orders. This means anticipated earnings outside these orders are no longer recognized in financial statements, ensuring speculative income does not distort fiscal transparency. Subsidies from state governments under the tariff subsidies program must be recorded and reported separately per guidelines.
Aimed at strengthening transparency, the new standards introduce several disclosure requirements:
<ul>
<li>Supplementary financial disclosures: Details on power sales, rebates, consumer tariffs, and government subsidies must be distinctly outlined.</li>
<li>Energy accounting: Power purchase data, including long-term, medium-term, and short-term transactions, and losses incurred in transmission are mandated to be reported.</li>
<li>Cost of supply vs. revenue gap: Entities must calculate and disclose the ACS cost against the ARR, helping regulators and stakeholders gauge efficiency and financial health.</li>
<li>AT&amp;C losses: Reporting on technical and commercial losses offers a granular view into inefficiencies, enabling corrective measures where necessary.</li>
</ul>
The minimum provisioning requirement for DISCOMs on their trade receivables from all categories of consumers in the financial statements is as follows: 
<img loading="lazy" decoding="async" class="aligncenter wp-image-71984 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables.png" alt="Minimum Provisioning Requirements for Trade Receivables" width="757" height="317" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables.png 757w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-300x126.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-650x272.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-624x261.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/10/Minimum-Provisioning-Requirements-for-Trade-Receivables-600x251.png 600w" sizes="auto, (max-width: 757px) 100vw, 757px" />
The management of each DISCOM must submit a compliance statement confirming adherence to these enhanced disclosure norms, establishing accountability, and preventing discrepancies in reporting.
These regulations could pave the way for a more transparent, accountable, and efficient power distribution sector.
Last April, the Ministry <a href="https://www.mercomindia.com/ministry-of-power-subsidy-accounting-framework-discoms/" target="_blank" rel="noopener">proposed</a> draft provisions in the Electricity (Amendment) Rules, 2023, for subsidy accounting and payment and a framework to ensure the financial sustainability of DISCOMs.
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Power Ministry Issues New Rules to Strengthen DISCOMs’ Financial Disclosure

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					</table>The Karnataka Electricity Regulatory Commission (<a href="https://kerc.karnataka.gov.in/en" target="_blank" rel="noopener">KERC</a>) has increased the average retail electricity tariff for all low-tension (LT) and high-tension (HT) categories by ₹0.70 (~$0.008)/kWh for the financial year (FY) 2023-24.
It was increased by 8.31% to ₹9.12 (~$0.011)/kWh compared to ₹8.42 (~$0.10)/kWh in FY23.
The revised tariff will be applicable from April 1, 2023.
Of the increase, ₹0.57 (~$0.007)/kWh will be recovered through fixed charges, and the remaining ₹0.13 (~$0.002)/kWh will be recovered as energy charges.
The electricity supply companies (ESCOMs), in their submission, had recommended an average increase of ₹1.39 (~$0.017)/kWh in tariff.
As a relief measure and to encourage the adoption of electric vehicles in the state, the Commission reduced the tariff for EV charging stations to ₹4.50 (~$0.054)/kWh as against the existing rate of ₹5 (~$0.061)/kWh.
The green tariff of ₹0.50 (~$0.006)/kWh for renewable electricity on top of the applicable tariff for HT industrial and HT commercial customers will continue.
Also, the rebate of ₹0.50 (~$0.006)/kWh for micro and small industries will continue for another year.
Under the Discounted Energy Rate program, KERC has reduced the energy charges to ₹5 (~$0.061)/kWh as against the existing rate of ₹6 (~$0.073)/kWh. Earlier, the program applied to HT consumers, which has now been extended to LT Industries and commercial installations with a sanctioned load of 50 kW and above.
To simplify the tariff structure, the number of consumer categories has been reduced to 21 from 31.
The Commission has directed the distribution companies (DISCOMs) to set up a portal to maintain the details of PPAs executed and approved by the competent authorities to monitor the terms and conditions of the PPAs and also to regulate the payment of power purchase bills online.
The portal should be made operational within three months.
The Commission has set a revised transmission tariff for the Karnataka Power Transmission Corporation (<a href="https://kptcl.karnataka.gov.in/english">KPTCL</a>) as ₹163,031 (~$1,971)/MW per month for FY 2024 against the transmission tariff of ₹172,897 (~$2,090)/MW per month approved earlier.
Annual Revenue Requirement 
The Commission approved a total Annual Revenue Requirement (ARR) of ₹581.09 billion (~$7.03 billion) as against ₹621.33 billion (~$7.51 billion) sought by the ESCOMs in their tariff applications.
Also, the Commission approved a net revenue deficit of ₹44.571 billion (~$539.02 million) for FY 2024, which included a revenue deficit of ₹17.201 billion (~$208.02 million) as per the annual performance review for FY 2022.
The proposed and approved ARR for ESCOMs
<a href="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png"><img loading="lazy" decoding="async" class="alignnone wp-image-54761 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png" alt="KERC-State-wise Approved ARR for FY 2024" width="374" height="197" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024.png 374w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2023/05/KERC-State-wise-Approved-ARR-for-FY-2024-300x158.png 300w" sizes="auto, (max-width: 374px) 100vw, 374px" /></a>
The Commission has approved a total ARR of ₹288.73 billion (₹3.49 billion) for the Bangalore Electricity Supply Company (<a href="https://bescom.karnataka.gov.in/english" target="_blank" rel="noopener">BESCOM</a>), whereas for the Mangalore Electricity Supply Company (<a href="https://mescom.karnataka.gov.in/english" target="_blank" rel="noopener">MESCOM</a>), the approved amount is ₹47.71 billion (~$577.2 million).
For the Chamundeshwari Electricity Supply Company (<a href="https://cescmysore.karnataka.gov.in/english" target="_blank" rel="noopener">CESC</a>), the approved ARR amount is ₹61.48 billion (~$743.7 million), whereas for the Hubli Electricity Supply Company (<a href="https://hescom.karnataka.gov.in/english" target="_blank" rel="noopener">HESCOM</a>) and the Gulbarga Electricity Supply Company (<a href="https://gescom.karnataka.gov.in/english" target="_blank" rel="noopener">GESCOM</a>), the approved ARR amount is ₹108.89 billion (~$1.32 billion) and ₹74.28 billion (~$898.5 million), respectively.
Hukkeri Rural Electric Cooperative Society
KERC has approved an ARR of ₹2.56 billion (~$30.96 million) for FY 2024 compared to ₹3.1 billion (~$37.49 million) approved by the Hukkeri Rural Electric Cooperative Society. The approved net revenue deficit for FY 2024 has been calculated as ₹22.8 million (~$275.73 million). The subsidy approved for free power has been set as ₹1.11 billion (~$13.42 million) for FY 2024.
ARR for Special Economic Zones 
KERC has approved the revised ARR of ₹701.4 million (~$8.48 million) for FY 2024 against ₹573.4 million (~$6.93 million) proposed by the Mangalore Special Economic Zone. The approved net revenue deficit for FY 2024 has been set as ₹17.88 million (~$216,234).
The Commission has also approved the revised ARR of ₹259.76 million (~$3.14 million) for FY 2024 against ₹248.3 million (~$3.01 million) proposed by AEQUS Special Economic Zone. The approved net revenue deficit for FY 2024 has been calculated as ₹1.06 million (~$12,819).
In January this year, DISCOMs of Karnataka <a href="https://www.mercomindia.com/karnataka-tariff-hike-proposal-to-deter-availing-open-access" target="_blank" rel="noopener">proposed</a> revised tariffs for LT and HT consumers, which included grid support charges for captive open access power consumers.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

Karnataka Increases Average Retail Electricity Tariff by ₹0.70/kWh for FY24

The Union Minister R.K. Singh said in Rajya Sabha that the gap between the Average Cost of Supply (ACS) and the Average Revenue Realized (ARR) at the national level reduced from ₹0.47 (~$0.006)/kWh in FY 2015-16 to ₹0.28 (~$0.004)/kWh in FY 2019-20.
The gap between the revenue and cost per unit/kWh is one of the critical performance parameters for power distribution companies. A wider gap reflects that the distribution companies are under loss as their revenues are far lower than their expenditure.
Earlier in June this year, the Union Finance Minister Nirmala Sitharaman had <a href="https://mercomindia.com/finance-minister-announces-%e2%82%b93-03-trillion-upgrading-discoms/" target="_blank" rel="noopener">announced</a> the ‘Economic Relief from Pandemic’ package and declared several sops for power distribution companies (DISCOMs), including ₹3.03 trillion (~$40.82 billion) outlay for reform-based result-linked power distribution program.
The program aims to improve the quality and the reliability of power supply to consumers through a financially sustainable and operationally efficient distribution sector. The plan is to reduce the aggregate technical and commercial (AT&amp;C) losses across India to 12-15% and eliminate the gap between the average cost of supply and the aggregate revenue requirement by 2024-25.
The minister added that all state-owned distribution companies and state and union territory DISCOMs, excluding private sector DISCOMs, will be <a href="https://mercomindia.com/ministry-power-plan-revamp-discoms/" target="_blank" rel="noopener">eligible</a> for financial assistance under the revamped distribution sector program.
According to the data released by the Ministry of Power, the ACS-ARR gap narrowed in 18 states/union territories between financial year (FY) 2016 to FY 2020. On the national level, the gap narrowed from ₹0.47 (~$0.006)/kWh to ₹0.28 (~$0.004)/kWh from FY 2016 to FY 2020.
In reply to the question, the minister shared the state-wise data regarding the narrowing of the ACS-ARR gap and the current status of the states. The data is based on the subsidies booked by the states to the central government.
<img loading="lazy" decoding="async" class="aligncenter size-full wp-image-28197" src="https://mercomindia.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India.png" alt="" width="456" height="941" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India.png 456w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/Gap-in-Average-cost-of-supply-ACS-and-Average-Revenue-Realised-ARR-on-Tariff-Subsidy-Booked-Basis-in-India-145x300.png 145w" sizes="auto, (max-width: 456px) 100vw, 456px" />
The ARR-ACS has considerably widened in Arunachal Pradesh, Meghalaya, Nagaland, Puducherry, and Tamil Nadu, which is concerning.
On the positive side, the ARR-ACS gap has narrowed significantly in Andhra Pradesh, Jammu &amp; Kashmir, Madhya Pradesh, Mizoram, and Sikkim.
Only six states have registered revenues more than the cost of power supply. These include Assam, Gujarat, Haryana, Himachal Pradesh, Rajasthan, and West Bengal.
In April last year, the Ministry of Power had <a href="https://mercomindia.com/electricity-act-amendment-draft/" target="_blank" rel="noopener">proposed</a> amendments to the Electricity Act 2003 to improve the health of DISCOMs, including direct benefit transfer and cost-reflective tariffs, among others.

Gap Between DISCOMs’ Energy Cost and Revenue Narrowed to ₹0.28/kWh in FY 2020

The Appellate Tribunal for Electricity (APTEL) has directed the state and joint electricity regulatory commissions to explain the delay in the revision of the tariff, lack of payments to the distribution companies (DISCOMs) and gaps in revenue over the last three fiscal years.
The matter dates back to a letter from the secretary to the Ministry of Power, written in January 2011. The letter laid out various challenges faced by distribution utilities which resulted in a serious impact on the financial status of the electricity sector. The matter was discussed, and the tribunal directed state electricity regulatory commissions that an annual performance review, true-up of past expenses, annual revenue requirement (ARR), and tariff determination must be conducted yearly on a timely basis.
However, state commissions of Andhra Pradesh, Manipur, Mizoram, Jharkhand, Punjab, Meghalaya, Tamil Nadu, and West Bengal have not been complying with those directions of the tribunal passed in November 2011. Following are the latest directions of the tribunal:
“We direct all the state and joint regulatory commissions to furnish the necessary information to the secretary of Forum of Regulators, who shall in turn file compilation of compliance reports before this tribunal. This exercise is to be completed on or before 31.10.2019.”
According to APTEL, the delay in tariff revisions was one of the main reasons for the financial stress that the state DISCOMs were witnessing. Currently, state DISCOMs owe power generators more than ₹525 billion ($7.4 billion).
<a href="https://mercomindia.com/payment-dues-discoms-renewable-escalate/" target="_blank" rel="noopener noreferrer">Recently</a>, the Central Electricity Authority’s (CEA) report stated that the total payment due for 513 renewable projects now amounts to ₹97.36 billion (~$1.36 billion) as of July 31, 2019, thus  showing an increase of nearly ~₹15 billion (~$0.21 billion) compared to the previous figure of ₹82.3 billion (~$1.14 billion) for the same period.
In <a href="https://mercomindia.com/payment-delays-hit-solar-and-wind-developers/" target="_blank" rel="noopener noreferrer">May 2019</a>, Mercom reported that payment delays were becoming a problem again for solar and wind project developers in India, especially in Andhra Pradesh, Tamil Nadu, and Telangana.

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