Telangana government rejects proposal to hike power tariff of consumers

The Telangana government is unlikely to increase the power tariff for consumers in the state for the upcoming financial year 2025-26

The Telangana government is unlikely to increase the power tariff for consumers in the state for the upcoming financial year 2025-26, even as the state power distribution companies (Discoms) projected a revenue deficit of ₹21,151 crore for the year, officials familiar with the matter said.

The Discoms projected that the gap between revenue and expenditure during 2025-26 would be to the extent of ₹20,151 crore, as per the existing electricity tariffs. (HT Photo)

In their annual revenue requirement (ARR) submitted to the state electricity regulatory commission (ERC) on Tuesday, the Discoms projected that the gap between revenue and expenditure during 2025-26 would be to the extent of ₹20,151 crore, as per the existing electricity tariffs.

“The Discoms have proposed to recover the gap between revenue and expenditure by increasing power tariff for at least a few categories of consumers, but the state government turned down their proposal and suggested that there shall be no increase in power tariff for any category of consumers,” an official in the state energy department said.

The estimated revenue for both the Discoms for the next year is ₹45,698 crore, while the projected expenditure is ₹65,849 crore, resulting in a financial deficit of ₹20,151 crore, the Discoms said in their report to ERC.

The Southern Discom, which covers mainly the Greater Hyderabad region, is expected to generate a revenue of ₹36,277 crore in revenue, while its expenditure is projected to be ₹46,035 crore, the report stated.

It further stated that the Northern Discom, which operates from Warangal, will likely generate a revenue of ₹9,421 crore, while its expenditure is expected to reach ₹19,814 crore.

If the state government allocates this amount as a subsidy in the budget, there will be no need to increase electricity tariffs, the Discoms indicated to the regulatory commission.

For the current financial year (2024-25), the government allocated ₹12,000 crore towards power subsidy. “It would mean, the government will have to allocate another ₹8,000 crore to Discoms towards subsidy if it doesn’t want the power tariff to go up,” the official said.

He pointed out that there has been no increase in the power tariff, but the cost of power purchase has gone up substantially, leading to a burden on the Discoms. At the same time, power consumption in the state is rising significantly, causing operational costs to surge, he said.

According to the ARR report, the losses are more in northern Telangana due to high electricity consumption by agricultural borewells and operation of the Kaleshwaram lift irrigation project, and other lift irrigation schemes.

“Moreover, the state government last year introduced Gruha Jyothi scheme, under which the government is providing up to 200 units of free electricity per month to low-income households. This is causing an additional burden of ₹2,400 crore per annum,” the official said.

According to the Electricity Act, the regulatory commission must conduct a public hearing on the ARR reports submitted by the Discoms and issue final orders on the report by the end of March each year.

“Before the conclusion of the public hearing, the state government has to indicate to the commission the quantum of power subsidy, which would be disclosed in the state annual budget. Based on this, the commission will take a call on the power tariff,” the official added.