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Despite ₹17K cr subsidy push, UPPCL loses ₹0.57 per unit
Agriculture remains the single largest beneficiary of government subsidy and the second biggest power guzzler. Over 16 lakh tubewells get nearly 60% of the total subsidy outlay
The Uttar Pradesh government has committed a subsidy of ₹17,100 crore for FY 2025-26 to support domestic and agricultural consumers. However, despite this substantial assistance, UP Power Corporation Ltd (UPPCL) continues to face a gap between the average cost of supply and the revenue it recovers from consumers.
According to the tariff order issued by UP Electricity Regulatory Commission (UPERC) here on Saturday, the average cost of supply for the year is projected at ₹8.18 per unit, while the average billing rate stands at ₹7.61 per unit, bringing a loss of ₹0.57 per unit sold to consumers.
This situation, as pointed out in the order, will create a revenue-expenditure gap of ₹7,710 crore for the corporation this year, even after factoring in the state subsidy.
The subsidy allocation submitted to the Commission has been assessed as adequate by UPERC when compared with approved billing determinants, but the figures highlight the sector’s heavy reliance on government support.
Significantly, agriculture remains the single largest beneficiary of this subsidy. Private tube wells (PTWs)/agricultural pumpsets (categorised as LMV 5) receive ₹10,204 crore, nearly 60% of the total subsidy outlay.
Farmers are supported through a flat subsidy of ₹705 per BHP per month. The government has made power free for PTWs and provided a cash subsidy to the UPPCL in lieu of that. Uttar Pradesh has 16.29 lakh PTWs and pumping sets with a combined connected load of 93.82 lakh kW, and their approved energy consumption for FY 2025-26 stands at 23,605.69 million units.
This makes agriculture the second-largest consumer category, after residential, in the state. It accounts for nearly one-fifth of the total approved consumption of 1,35,722 MU and draws far more electricity than small and medium industries (which consume 3,843.96 MU), and even more than large industries (16,145.75 MU).
Domestic consumers also receive significant support. Lifeline consumers, who are poor rural and urban households, receive a subsidy of ₹3.50 per unit, amounting to ₹2,492 crore. Rural domestic consumers using up to 100 units a month get ₹3.30 per unit in subsidy, totalling ₹2,873 crore, while those in the 101–150 unit slab receive ₹3.00 per unit support, amounting to ₹1,531 crore.
The Commission has reminded the discoms that under Section 65 of the Electricity Act, 2003, the government subsidy must be released in advance, and directed utilities to reconcile all subsidy receipts with the amounts reflected in individual consumer bills. “Final accounting of subsidy utilisation will be undertaken during the True-Up for FY 2025-26 based on audited data,” the order said.
Even as the cost–revenue gap persists, the commission has ruled out any tariff increase for the year. UPERC noted that UPPCL and the state discoms were projected to hold an accumulated regulatory surplus of ₹18,592.38 crore as on April 1, 2025, which, it said, was more than sufficient to absorb the projected gap for the year.
“The UPPCL’s over ₹7,000 crore losses expected during the current year are largely attributed to high line losses/theft, poor bill collections and more expenditures,” a senior UPERC official said.
