Power tariff refund masks deeper malaise
- Rs 923 cr relief to electricity consumers only corrects part of Rs 2,787 cr overcharge
- 13,615 MU thermal power backed down while expensive short-term purchases drained Rs 1,500-2,000 cr
Vijayawada: The Andhra Pradesh government is showcasing the Electricity Regulatory Commission’s (APERC) order for a Rs 923.50 crore refund to consumers as proof of its efficiency and commitment to lower power costs. But behind the figure lies a far grimmer picture, including mismanagement, poor forecasting, costly purchases, and underperforming plants that have already drained far more money from consumers and the State than what is being refunded.
The refund stems from APERC’s true-up order for 2024–25. Discoms had collected Rs 2,787.19 crore from consumers through provisional fuel cost adjustments at Rs 0.40 per unit. The Commission admitted only Rs 1,863.64 crore, forcing the refund of the excess. In effect, consumers were first overcharged and are now only partially reimbursed.
In fact, discoms failed to anticipate a collapse in demand. Approved sales were set at 73,054 million units (MU), but actual sales reached only 69,680 MU, a 3,374 MU shortfall. Industrial consumption fell sharply in the eastern region, particularly ferro-alloy and steel units, costing the sector an estimated Rs 1,000–1,700 crore in lost revenue. National trends had already signaled stress in these industries, but Discom forecasting ignored the warning signs.
Even as demand slipped, 13,615 MU of thermal power was backed down in 2024-25, with generators still paid fixed charges for idle plants. At the same time, discoms bought 5,283 MU from short-term markets at an average Rs 6.79 per unit, far higher than the cost of operating domestic plants. This scheduling paradox added another Rs 1,500–2,000 crore burden on consumers.
The state-run APGenco plants also performed poorly. NTTPS-V (800 MW) ran at just 49.98 per cent availability, losing 1,699 MU. RTPP Stage-IV (600 MW) achieved 62.56 per cent, short by 375 MU. Main NTTPS units (1,260 MW) also missed targets, underscoring operational inefficiencies. Chronic issues like aging equipment and poor quality coal supply were blamed by APGenco, but penalties remained limited to partial cost disallowances.
On other hand, discoms bought 2,417.86 MU expensive power from unapproved stations such as NTPC Kudgi and NTECL Vallur for Rs 1,531 crore. While APERC disallowed Rs 337 crore and applied lower deemed rates, the matter is under litigation.
If appellate bodies reverse the decision, consumers could impose retrospective liabilities. Instead of relying on planned sources, DISCOMs leaned excessively on the short-term market, buying five times more than approved. High-cost purchases peaked in April–June 2024 at Rs 7.84 per unit.
Discoms also borrowed 774 MU under swap deals worth Rs 346.83 crore, creating liabilities for 2025- 26. They also faced claims of Rs 392 crore in late payment surcharges due to chronic delays of 60 to 90 days, exposing deep liquidity stress.
The government already spends over Rs 23,000 crore annually on subsidies for free farm power and concessional tariffs. With refunds now ordered, this subsidy burden only grows. Critics say subsidies are masking structural inefficiencies, allowing neither Discoms nor generators to reform.
The Rs 923 crore refund is not fresh relief, it merely corrects an overcharge of Rs 2,787 crore. The true-up order has laid bare systemic failures in forecasting, generation, and procurement that continue to load costs onto consumers and taxpayers.
