UP To Hike Electricity Cost? Rates May Increase by 20%

New Delhi: The Uttar Pradesh government has announced the implementation of the Multi-Year Distribution Tariff Regulations 2025, which will be in effect for the next five years, until 2029. This move follows the recommendation of the state's Electricity Regulatory Commission (UPERC), and the notification has been officially issued by the state government. 

While the new regulations are expected to bring in nearly ₹4,000 crore in annual benefits for electricity companies, consumers are likely to face higher electricity costs.

20% Rate Hike Expected

As part of the new regulation, the Electricity Regulatory Commission will soon begin the process of setting electricity rates for the fiscal year 2025-26. 

There are concerns that the rates could increase by up to 20% due to the financial losses claimed by electricity companies in their Annual Revenue Requirement (ARR). 

These companies have cited a ₹13,000 crore deficit in their current rates.

The electricity companies have submitted a proposal for an ARR exceeding ₹1 lakh crore, with approximately ₹70,000 crore allocated for electricity purchases. 

They have also proposed a loss of 13.82% due to factors such as electricity theft, as part of the Revamped Distribution Sector Scheme (RDSS). 

Additionally, electricity companies have proposed around ₹11,800 crore for operational and maintenance expenses in the ARR.

In total, the new regulations could potentially result in a benefit of ₹3,500 to ₹4,000 crore for electricity companies, primarily from operational, maintenance, and distribution losses. However, consumers will likely bear the brunt of these financial benefits in the form of higher electricity rates.

Despite the regulatory framework suggesting that electricity companies are making significant profits ₹33,122 crore from the surpluses generated consumer groups are concerned that the collaboration between private players and state power companies may lead to an unfair increase in rates.