Your power bills may rise annually after Centre proposes index-linked pricing

Subscribe to enjoy similar stories. NEW DELHI : Electricity bills for consumers across India could begin rising automatically every year starting next fiscal, regardless of political reluctance at the state level. The Union power ministry has proposed index-linked tariff revisions in its draft National Electricity Policy (NEP) released on Wednesday, to force cost-reflective pricing if state electricity regulatory commissions (SERCs) fail to act.

The nature and methodology of the index will have to be devised by the SERCs under the draft policy. Further, the NEP said that an increase in power purchase cost—by distribution companies or discoms—must be automatically passed through to consumers on a monthly basis. The ministry has recommended setting up stabilization funds by discoms to manage power purchase cost fluctuations.

This would potentially imply even higher bills for consumers every month. The ministry has sought responses from all stakeholders including discoms, regulators, state governments and consumer groups, on the draft policy, within 30 days. To be sure, electricity is a concurrent subject, with tariffs determined by the SERCs, but irregular revisions have contributed to financial stress at distribution companies.

According to data from the power ministry, 15.04% of electricity supply turned into losses—technically called aggregate technical and commercial (ATC) losses—in FY25. Noting that recovery of cost of service is essential for the sustainability of the power sector, the ministry in its draft policy said, “From FY 2026-27, state commissions must ensure that tariffs fully reflect costs without creating regulatory assets. Tariffs must be linked to a suitable index for automatic annual revision, which