Ahead of 2027 polls, no power tariff hike likely in Uttar Pradesh for seventh straight year

In addition to political aspects, technical reasons are behind repeated decisions not to raise power tariff in Uttar Pradesh

Power consumers in Uttar Pradesh are set to be spared an increase in electricity tariffs for yet another year, with the state regulator expected to retain existing rates for 2026-27, extending the zero-hike streak to seven consecutive years and benefiting millions of consumers.

In its last tariff order, UPERC had flagged a substantial regulatory surplus of over ₹18,500 crore which remained even after adjusting the annual revenue gap. (REPRESENTATIONAL IMAGE)

With assembly elections due early next year, the expected status quo also carries political overtones as any upward revision in power tariff would be seen as a consumer-unfriendly move in a poll-bound state. Political aspects are in addition to the technical reasons that the regulator has dealt with. The Uttar Pradesh Electricity Regulatory Commission (UPERC), which concluded public hearings on the annual revenue requirement (ARR) petitions about two weeks ago, is currently finalising the tariff order. The new rates are likely to be announced by the end of April and will come into effect from May. The commission has already announced the tariff orders for the transmission utility and the state load dispatch centre.Highly placed sources indicated that the commission is inclined to maintain the status quo on tariffs, continuing the trend seen since 2019-20. If formalised, the decision will benefit over 3.5 crore (35 million) consumers across the state, even as the cumulative losses of distribution companies (discoms) have crossed the ₹1 lakh crore mark.

The expected decision is in line with the commission’s surplus-based regulatory approach adopted in recent years. In its last tariff order, UPERC had flagged a substantial regulatory surplus of over ₹18,500 crore which remained even after adjusting the annual revenue gap. This surplus has been the key reason behind repeated decisions not to raise tariffs despite mounting financial stress in the power sector.

The surplus emerged after the commission tightened norms for allowable expenditure under its 2019 tariff regulations, leading to a situation where discom revenues at approved tariffs exceeded admissible costs. Additionally, gains linked to the Centre’s UDAY scheme where the state took over a large portion of discom debt have also been treated by the regulator as consumer-benefiting surplus, further strengthening the case against tariff hikes.

Discoms, however, continue to contest this approach and multiple tariff orders remain under challenge before the Appellate Tribunal for Electricity (APTEL), and the final outcome of these cases is expected to have a bearing on future tariff trajectories.

Officials said that, technically, the existing surplus is large enough to offset revenue gaps for the next few years, potentially delaying any tariff revision further. In fact, the commission had earlier observed that a significant tariff reduction would be required to fully adjust the surplus, though it refrained from doing so citing the fragile financial condition of discoms.

Apart from regulatory considerations, the timing of the tariff order also assumes political significance. With assembly elections due early next year, any upward revision in power tariffs is seen as unlikely, as it could be perceived as anti-consumer. Significantly, discoms this year did not file any tariff hike proposal separately and they left it to the regulator to take call on tariff revision considering their financial health.

For now, however, Uttar Pradesh appears set to maintain its rare distinction of not increasing the distribution tariff for so many years on end.