Central govt's draft National Electricity Policy: Power bills to increase automatically every year

NEW DELHI: The central government is preparing to implement a system where electricity rates will increase automatically every year. Without waiting for the decision of the state regulatory commissions, the electricity rates will increase every April 1, linked to a fixed index. The central government released the draft of the National Electricity Policy for 2026 in this regard.

The relevant bill will be presented in the budget session of Parliament after incorporating the opinions of the states and the public.

The central government reasoned that the move was needed to meet the challenges of losses and arrears faced by the electricity distribution companies. The cost of distribution should be reflected in the rate without delay. The consumer should also bear the additional cost of electricity purchased from outside. The rate should be fixed at the beginning of the financial year.

This will eliminate the practice of regulatory commissions setting electricity tariffs based on figures submitted by distribution companies. The draft also proposes to set an index so that the rates increase every year.

Domestic cross-subsidies will be eliminated

1. Cross-subsidies, which reduced the rates of domestic and agricultural users by charging more from commercial consumers, will be brought to an end in a phased manner.

2. Electricity can also be supplied to private companies through distribution lines. By 2032, all cities with a population of more than 10 lakh should have transformer back-up.

3. Electricity tariff should not be less than 50% of the distribution cost. Free electricity only if an advance subsidy is given to distribution companies.

4. Electricity supply should be underground in big cities. Solar power and night battery storage for agricultural needs by 2030.

5. No cross-subsidies and surcharges for the construction industry, railways and metro railways.

6. Target per capita electricity consumption of 2,000 kWh by 2030 and 4,000 kWh by 2047.

7. Target of 100 GW by 2047 through new modular reactors and small reactors, nuclear energy for commercial and industrial use.