The Telangana Electricity Regulatory Commission (TGERC) has granted Telangana Rythu Power Distribution Company (TGRPDCL) a license to undertake the distribution and retail supply of electricity across the state.

The license covers agricultural consumers, lift irrigation scheme consumers, Mission Bhagiratha and Composite Protected Water Supply Program consumers, the Hyderabad Metropolitan Water Supply and Sewerage Board, and municipal water supply connections having separate distribution transformers.

The Commission granted the license under the fifth proviso to Section 14, read with Section 131 of the Electricity Act, 2003. The license will become effective only after the Telangana government issues a statutory transfer program under Sections 131(4) and 131(5) of the Act and TGRPDCL files an application under Schedule 2 of the Distribution License Regulations, 2016.

TGRPDCL’s business commencement date has been set at four months from the July 10, 2026, order, subject to fulfillment of the conditions and pre-commencement directions prescribed by the Commission.

The Commission also allowed the petitions filed by the Northern Power Distribution Company of Telangana (TGNPDCL) and the Southern Power Distribution Company of Telangana (TGSPDCL) seeking amendments to their distribution licenses. Their licenses will stand amended from the date TGRPDCL commences business, excluding the consumer categories assigned to the new DISCOM from their service obligations. Their geographical areas and obligations toward all other consumers will remain unchanged.

Background

The Telangana government approved the formation of a third distribution company through an order dated December 17, 2025, to handle electricity supply to specified government-supported categories.

TGRPDCL, described as the Rythu (farmer) DISCOM, was subsequently incorporated on March 11, 2026.

TGRPDCL sought a statewide distribution license, proposing to serve agricultural, lift irrigation, and drinking-water programs, as well as municipal water connections. It planned to take over agricultural distribution transformers and downstream low-tension infrastructure from the incumbent DISCOMs, while using their 11 kV and 33 kV upstream networks through wheeling and service arrangements.

TGNPDCL and TGSPDCL separately sought amendments to their existing licenses to transfer the identified consumer categories to TGRPDCL.

Further, upon transfer of the identified network to TGRPDCL, the CAPEX requirements to meet future load growth and new connections will be detailed and addressed in the business plan submissions, in line with regulatory requirements.

The major CAPEX expenses of TGRPDCL would be related to the release of new service connections, the installation of transformer monitoring units, and network enhancements on an as-needed basis. The above CAPEX requirements are expected to be incurred in phases.

Stakeholders questioned whether a distribution license could legally be restricted to specified consumer categories, arguing that Section 43 of the Electricity Act imposes a universal obligation on a licensee to supply every eligible applicant in its area.

They also raised concerns about TGRPDCL’s absence of an independent end-to-end distribution network, its ₹50 million (~$519,890) initial capital, reliance on government subsidies, lack of a complete business plan, and dependence on incumbent DISCOMs for upstream infrastructure.

Stakeholders submitted that the Transfer Scheme, including the effective date for the transfer of assets and liabilities, has not yet been notified, and no definite timeline has been provided for the transfer of assets valued at ₹49.29 billion (~$512.51 million).

Further, they stated that the notification of the Transfer Scheme is essential for resolving issues relating to valuation, arrears, loans and operational transfer, and requested that it be notified with a defined effective date since assets.

Other objections concerned the proposed transfer of assets worth about ₹49.29 million (~$512.51 million), allocation of power purchase agreements, loss of cross-subsidy, employee deployment, interface metering, consumer data migration, grievance redressal, operational coordination, and the transfer of agricultural consumers without their individual consent.

TGRPDCL argued that the proposal was not competitive entry by an independent private licensee but a statutory restructuring of existing government-owned utilities.

The petitioner maintained that the new structure would improve agricultural energy accounting, subsidy transparency, financial discipline, infrastructure management and service quality. It also said the government would continue to support subsidized supply, provide additional equity when required, and maintain free electricity for agricultural consumers without installing individual meters on agricultural pump sets.

Commission’s Analysis

The Commission characterized the proposal as a further reorganization of an existing public electricity undertaking rather than the entry of a new market participant.

It noted that TGRPDCL would be entitled to recognition as a distribution licensee after the government issues the formal statutory transfer program. It therefore assessed the proposal as a restructuring under Section 131, rather than as a parallel-licensing application under the sixth proviso to Section 14.

The Commission noted that TGRPDCL will have a binding duty to supply consumers falling within its assigned categories, including consumers in remote or commercially unattractive areas. TGNPDCL and TGSPDCL will continue to serve all remaining categories, ensuring that no consumer is left without an identified supplier.

The Commission also rejected the claim that TGRPDCL must own a complete independent network before receiving authorization. It observed that agricultural DTRs, LT lines and associated last-mile infrastructure form part of a distribution system. Shared use of the incumbent DISCOMs’ upstream infrastructure is permitted under the state’s regulatory framework and will remain subject to Commission-determined wheeling charges and operational agreements.

Regarding financial capacity, the Commission said TGRPDCL’s ₹50 million (~$519,890) initial capital reflected its incorporation stage rather than its eventual operating scale. A final capital adequacy assessment will be undertaken after the business plan and asset-liability transfer arrangements are completed and before commencement.

The Commission directed TGRPDCL to submit a comprehensive business plan within three months.

TGRPDCL and the incumbent DISCOMs must execute transition memoranda, service-level agreements and bulk supply agreements within 60 days.

Pending final power purchase agreement (PPA) allocation, the incumbent DISCOMs will supply power to TGRPDCL under bulk supply arrangements. The three DISCOMs must also conduct a minimum three-month mock run of the proposed PPA allocation mechanism.

The Telangana government is expected to issue the statutory transfer scheme at least six weeks before commencement. Until TGRPDCL establishes its own consumer grievance redressal forums, the forums of TGNPDCL and TGSPDCL will continue handling complaints from transferred consumers.

Last month, TGERC approved the procurement of 375 MW/1,500 MWh of battery energy storage capacity, proposed by distribution companies through the Telangana Power Generation Corporation, under the Viability Gap Funding program.

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