E-Paper
Punjab slashes power tariffs; state exchequer biggest beneficiary
With 2027 assembly elections in sight, PSERC order provides ₹7,851-cr relief; move to significantly lower govt’s subsidy burden as PSPCL cuts losses.
Ahead of the 2027 Punjab assembly elections, the Punjab State Electricity Regulatory Commission (PSERC) has reduced electricity tariffs across all consumer categories for the 2026-27 fiscal.
However, the move is expected to benefit the cash-strapped state government more than the common consumer, as it will significantly lower the massive subsidy burden the state pays for free and subsidised power.
The regulator stated that the downward revision would provide an overall relief of ₹7,851.91 crore while maintaining the financial viability of the Punjab State Power Corporation Limited (PSPCL). This surplus was primarily achieved after PSPCL, in an unprecedented move, submitted a revised petition reducing its projected power losses from 12% to 10%.
Subsidy math
The revised tariff order, applicable from April 1, 2026, to March 31, 2027, reduces energy charges for domestic, commercial, industrial, and agricultural sectors. However, since a dominant share of Punjab’s consumption, particularly in agriculture and domestic slabs, is already covered by 100% state subsidy, the lower rates mean the government will simply pay less to PSPCL to cover these freebies.
“The practical impact is fiscal,” a senior official noted. “When the base tariff drops, the amount the government owes the utility for free power automatically declines, easing the pressure on the state exchequer.”
Financial turnaround
While PSPCL originally claimed a revenue deficit of ₹453 crore for the period ending FY 2026-27 and sought a hike, the commission’s “prudence check” found a massive surplus instead.
By factoring in the “true-up” of FY 2024-25 and the utility’s improved efficiency, the PSERC, led by chairman Viswajeet Khanna, fixed the net revenue requirement at ₹44,939.50 crore against a projected revenue of ₹52,791.41 crore.
Consequently, the average cost of supply (ACoS) for FY 2026-27 has been pegged at ₹6.15 per unit, a sharp drop from ₹7.15 in the current fiscal.
Ease of business & EV push
In a bid to spur economic activity, the commission expanded the load limit for the small power industrial category from 20 kW to 50 kW. Furthermore, the tariff for electric vehicle (EV) charging stations was slashed to ₹5 per kVAh, among the lowest in India, to incentivise green mobility.
In a relief for the legal fraternity, electricity connections for lawyers’ chambers in court complexes (registered with the Bar Council) will now be billed under the cheaper domestic category, as will registered bed-and-breakfast and homestay units.
Key tariff cuts (FY 2026-27)
Category, Existing rate New rate
Domestic (Up to 2kW/300 units) ₹5.40/unit ₹3.85 / unit
Agriculture (Pumpsets) ₹6.70/unit ₹5.38 / unit
Commercial (Up to 500 units) ₹6.89/unit ₹6.10 / unit
Industrial (large/medium) Variable Reduced by 60-70 paise
EV charging stations ₹6.28/kVAh ₹5/kVAh
