Discoms seek tariff hikes up to 40% as demand, costs soar

Power distribution utilities plan to raise tariffs ranging from single digits to as high as 40% across states if approved by the state electricity tariff regulators. Discoms in states such as Uttar Pradesh, Maharashtra, Madhya Pradesh, and Himachal Pradesh have already proposed increases in tariffs.

- Rituraj Baruah

For instance, discoms in Madhya Pradesh have recommended a hike of 3.2% due to a projected revenue gap of ₹1,527 crore in FY24. In turn, state-owned Maharashtra State Electricity Distribution Co. Ltd has proposed a tariff hike in the range of 30-40% for residential and commercial consumers.

Most state electricity regulatory commissions are yet to release their tariff orders or post the petitions from the discoms. The Bihar Electricity Regulatory Commission, for instance, has approved a 24% tariff hike starting 1 April, rather than the 54% increase recommended by the discom.

In contrast, the Andhra Pradesh government has opted not to increase tariffs for FY24 and has instead agreed to provide discoms with a subsidy to cover the revenue gap of ₹10,135 crore.

The increase in tariffs will help compensate for higher fuel expenses, the cost of power purchase agreements (PPAs) and the requirement to blend costly imported coal to meet peak power demand in April and May.