Electricity Cannot Be Sold Below Cost: NEP 2026 Draft
The government has clarified that the current practice of providing subsidies and free electricity will not continue indefinitely. Industries will no longer be allowed to sell electricity at high rates to some sectors while supplying others at below-cost rates.
Key Points of NEP 2026 Draft
Subsidy Budget Provision
The NEP-2026 emphasizes restoring the financial health of power distribution companies (DISCOMs) and gradually eliminating excessive cross-subsidies. If a state provides electricity subsidies, it must allocate budget provisions for the same. The focus is on implementing cost-based tariffs so that DISCOMs can exit the cycle of debt.
DISCOM Debt Situation
According to NEP, all DISCOMs in India currently have a total debt of ₹7.18 lakh crore and cumulative losses exceeding ₹6.9 lakh crore. If state electricity regulatory commissions do not issue tariff orders, tariffs will still increase automatically based on the annual revision index. Electricity prices will never fall below the stable cost of supply.
Exemptions for Industry and Large Consumers
Cross-subsidy and surcharge exemptions are proposed for manufacturing industries, railways, and metro rail to improve competitiveness and reduce logistics costs. Consumers with loads of 1 MW or more will be exempt from the Universal Service Obligation (USO) and can purchase electricity from any distribution company. DISCOMs will not be mandated to supply electricity to any specific area.
Concerns and Benefits
The All India Power Engineers Federation opposed exemptions for private companies, fearing they may serve only profitable areas and neglect rural, agricultural, and low-income consumers. However, the draft claims that smaller consumers will benefit from lower supply costs, and industries will get cheaper electricity.
Solarization of Agricultural Feeders by 2030
NEP 2026 proposes complete solarization and storage of all agricultural feeders by 2030 to ensure stable daytime electricity supply for farmers. By 2030, the goal is to eliminate the subsidy burden on states. The policy estimates investments of ₹50 lakh crore by 2032 and ₹200 lakh crore by 2047 for the power sector.