India, Aug. 10 -- The Government of India has issued a release:

Government has established a comprehensive policy and regulatory framework under the provisions of the Electricity Act, 2003 to ensure financial sustainability of the electricity sector while safeguarding consumer interests. The framework comprises, inter alia, the National Electricity Policy, the Tariff Policy, and subordinate legislation framed by the Appropriate Government, Central Electricity Authority, and the Electricity Regulatory Commissions.

Electricity tariffs in India are determined by the Appropriate Electricity Regulatory Commissions under the Electricity Act, 2003. These Commissions are guided by the National Tariff Policy formulated by the Central Government. State Electricity Regulatory Commissions determine the retail tariff considering power procurement, transmission, wheeling and supply costs. State Governments may provide subsidy to any class of consumers including domestic consumers in the tariff determined by the State Commission.

Central Government has taken various initiatives aimed at reducing the cost of electricity. Guidelines have been issued for competitive procurement of electricity by Distribution licensees. Distribution licensees have been enabled to purchase electricity from power exchanges at competitive prices. Under the scheme for flexibility in utilisation of domestic coal, plants supplying electricity to Distribution licensees have been allowed to use cheaper coal for generation. Lower-cost inter-state generating stations are being prioritised for dispatch of electricity. Distribution licensees have also been incentivised to reduce their technical and commercial losses under Revamped Distribution Sector Scheme (RDSS).

Draft National Electricity Policy, 2026 proposes that distribution licensees prepare Resource Adequacy Plans to ensure least-system-cost based power procurement. It further provides that tariffs should progressively recover fixed costs through demand/fixed charges so that tariff design better reflects the cost of supply while promoting efficient consumption. The Draft Policy also proposes that variations in power purchase costs, including fuel costs, be passed through to consumers through automatic monthly Fuel and Power Purchase Cost Adjustment (FPPCA) mechanisms. Further, it envisages the creation of suitable stabilisation fund to moderate the impact of fluctuations in power purchase costs on consumers.

The Draft Policy further provides that State Electricity Regulatory Commissions should ensure that tariffs progressively reflect the prudent cost of supply without the creation of regulatory assets. It also proposes timely annual tariff revisions, including through suitable indexation-based mechanisms where appropriate, in cases where tariff orders are not issued within the defined timelines, so as to maintain the financial sustainability of distribution licensees.

Consumer protection has been strengthened through the Electricity (Rights of Consumers) Rules, 2020, which prescribe standards relating to new electricity connections, quality and reliability of supply, metering, billing, grievance redressal, compensation for specified service deficiencies, and consumer-centric service delivery. In addition, the Draft National Electricity Policy, 2026 proposes that distribution licensees ensure reliable, affordable and quality 24x7 electricity supply, and strengthen grievance redressal through robust online complaint registration, tracking and disposal mechanisms, including virtual hearings by Consumer Grievance Redressal Forums and the Ombudsman.

Government of India has supplemented the efforts of the States earlier through schemes like Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), Pradhan Mantri Sahaj Bijli Har Ghar Yojana (SAUBHAGYA) and currently under Revamped Distribution Sector Scheme (RDSS), to help them achieve the objective of providing quality and reliable supply of power.

In addition to above, to support the power distribution licensees, some of the key initiatives taken, in addition to RDSS, are as under:

(iii) The measures taken by the Government to expand the integration of renewable energy are enclosed at Annexure.

(iv) The Draft National Electricity Policy, 2026 further provides a long-term roadmap for strengthening the power sector by achieving single-digit AT&C losses through smart metering, regular energy audits, GIS-based asset mapping, and consumer indexing. It also proposes strengthening of corporate governance of distribution licensees, introduction of shared distribution networks, and establishment of Distribution System Operators (DSOs) to facilitate integration of distributed renewable energy, energy storage systems and Vehicle-to-Grid (V2G) technologies. For effective transmission capacity expansion and integrating higher shares of renewable energy, the draft policy envisages modernization of the transmission network through adoption of technologies such as Flexible AC Transmission Systems (FACTS), Dynamic Line Rating, underground cabling where appropriate, simplified utilisation-based transmission connectivity, use of dated thermal generating stations as synchronous condensers and accelerated deployment of energy storage systems to support a resilient and flexible grid.

Any impact of changes in fuel prices or electricity demand on consumer tariffs is assessed by the State Electricity Regulatory Commissions in accordance with the applicable tariff regulations, including the Fuel and Power Purchase Cost Adjustment (FPPCA) mechanism, and is allowed to be recovered through tariffs only with due regulatory scrutiny.

Government of India has taken following measures to ensure affordable, reliable and sustainable electricity supply:

a. Thermal Capacity Addition: The projected thermal (coal and lignite) capacity requirement by the year 2035-36 is estimated at approximately 3,15,000 MW. To meet this requirement, Ministry of Power has envisaged to set up an additional minimum 1,05,000 MW coal and lignite based thermal capacity.

Accordingly, Thermal capacities of around 21,080 MW have been commissioned since April 2023 till 30.06.2026. In addition, 47,545 MW of thermal capacity (including 4,845 MW of stressed thermal power projects) is currently under construction. The contracts of 16,000 MW have been awarded and are due for construction.

b. Central Electricity Authority has projected hydro power capacity addition of about 16,448 MW during the period 2026-27 to 2031-32. Of this, 400 MW has been commissioned as on 30.06.2026 and 12,973 MW are presently under construction.

c. Nuclear Capacity Addition: 8,000 MW of nuclear capacity is under construction and targeted to be completed by 2031-32. 5,600 MW of nuclear capacity is under various stages of planning and approval.

d. Renewables Capacity Addition: 1,47,720 MW renewable capacity including 119,580 MW of solar (including Hybrid-Solar) and 27,720 MW of wind (including Hybrid-wind) is under construction while 47,830 MW of renewable capacity including 44,440 MW of solar is at various stages of planning and targeted to be completed by 2029-30.

(iv) Coordinated transmission planning is undertaken in the National Electricity Plan (Transmission) to avoid congestion, minimize curtailment and optimise network augmentation requirements. To address the intermittency associated with RE sources, the Government is promoting a combination of energy storage and hybrid solutions to ensure grid stability and reliable power supply. Under the plan, around 47 GW of Battery Energy Storage Systems (BESS) has been considered for integration by 2031-32. Further, roadmap for integrating 100 GW Pumped Storage Plants (PSPs) from the year 2025-26 to 2035-36 has been prepared.

In addition to the above, the Ministry of Power has issued guidelines dated 14.06.2024, 21.03.2025 and 15.12.2025 regarding the payment of compensation for Right of Way (RoW) for transmission lines, wherein the land rate has been linked to the prevailing market rate. These guidelines address the key challenges of RoW arising from landowners demanding higher compensation than the rates determined by the State Government.

With the concerted effort of Central and State Government, the average hours of supply in rural areas have increased from 12.5 hours in FY14 to 22.6 hours in FY26 and in urban areas the same has increased from 22.1 hours in FY 14 to 23.4 hours in FY26.

ANNEXURE

A few of the key measures taken by the Government to expand the integration of renewable energy are:

This information was given by The Minister of State in the Ministry of Power, Shri Shripad Naik, in a written reply in the Rajya Sabha today.

Disclaimer: Curated by HT Syndication.