AAP govt slashes power rates in Punjab, switches on poll bonanza buzz

CHANDIGARH: Ahead of the 2027 assembly elections, the AAP govt on Friday announced a reduction in electricity tariffs across all consumer categories for FY 2026–27.The move brings down power rates by up to Rs 1.55 per unit for domestic consumers, 79 paise per unit for commercial users, and 74 paise per unit for industrial units. This downward revision is expected to provide an overall fiscal relief of Rs 7,851.91 crore. Effectively, since up to 300 units per month is already free for domestic consumers, the reduction of Rs 1.55 per unit in the initial slab mainly benefits the state govt by lowering the subsidy reimbursement amount owed to the PSPCL. However, for consumers exceeding the 300-unit threshold, the actual relief will be Rs 0.70 per unit, with the tariff reduced from Rs 7.75 to Rs 7.05 per unit. Power minister Sanjeev Arora said the tariff reductions, effective April 1, will provide substantial relief to households, strengthen MSMEs, and boost industrial competitiveness in Punjab. He added that the EV charging tariff has been slashed to Rs 5 per unit, which he claimed is among the lowest in the country. Arora said the state govt will continue to provide 300 units of free electricity per month to approximately 90% of households. "Even for households consuming beyond the free quota, tariffs have been reduced. For consumption above 300 units, the rate has been cut by Rs 0.70 per unit, providing additional relief to higher-consumption households," he said. The Punjab govt also reduced fixed charges for domestic consumers. For households with a load between 2 kW and 7 kW, fixed charges have been reduced by Rs 5 per kW; for loads between 7 kW and 20 kW, charges were slashed by Rs 10 per kW. For commercial consumers with a load up to 7 kW, tariffs have been reduced by Rs 0.79 per unit for consumption up to 500 units and by Rs 0.65 per unit for consumption above 500 units. For commercial connections between 7 kW and 20 kW, fixed charges have been reduced by Rs 10 per kW per month, while energy charges were revised to Rs 6.10 per unit (up to 500 units) and Rs 7.10 per unit (above 500 units). "For the industrial sector, energy charges will remain unchanged for FY 2026–27. However, fixed charges have been reduced," Arora said. For industrial connections up to 50 kW, fixed charges were cut by Rs 10 per kW per month, while connections between 50 kW and 100 kW saw a reduction of Rs 15 per kW per month. While the rate cut provides direct consumer relief, the state treasury is also expected to benefit. By slashing base energy charges, the state will reimburse a lower amount to the Punjab State Power Corporation Limited (PSPCL) for the 300 units of free power provided to domestic consumers. Consequently, the estimated domestic supply subsidy is set to drop to Rs 5,490.86 crore for FY 2026–27, down from Rs 6,859.93 crore the previous year. Similarly, the estimated agricultural subsidy will decline to Rs 8,781.77 crore from the previous year's Rs 10,413.14 crore. In a separate decision, electricity connections in lawyers' chambers registered with the Bar Council of Punjab and Haryana located within court complexes will now be charged under domestic rather than commercial tariff. "The order notes that the regulatory framework and financial discipline in the power sector enabled PSPCL to become an efficient and profit-generating power utility. PSPCL secured an A+ rating and recorded a profit of Rs 2634 crore in the financial year ending March 31, 2025," said Arora. He added, "Another highlight of the tariff order is the reduction in the average cost of electricity supply in Punjab. The average cost declined to Rs 6.15 per unit compared to Rs 7.15 per unit in the previous year, making it the lowest average electricity cost in the last 10 years." The tariff order also provides a push to clean mobility by reducing the electricity tariff for EV charging stations to Rs 5 per unit, placing Punjab among the states with the lowest EV charging tariffs in the country. Besides, the commission has introduced measures such as increasing the applicable limit for the small power category from 20 kW to 50 kW to promote ease of doing business, continuing special night tariff benefits for industrial consumers, and reducing the green energy tariff to encourage greater adoption of renewable energy by industries. Pending power subsidy dues cross Rs 11,000 crore As of the close of FY 2025–26, the Punjab govt faced a shortfall in subsidy payments to PSPCL totalling Rs 11109.70 crore. This pending amount includes legacy subsidy dues, dues subject to true-up adjustments, and interest accrued on delayed payments. The commission noted that the govt struggled to clear its five-instalment legacy debt plan, failing to release the scheduled instalments for both FY 2024–25 and FY 2025–26. For the upcoming FY 2026–27, the total projected financial obligation for the state govt—combining the new annual subsidy requirement and these accumulated pending dues—is estimated at Rs 26,310.25 crore. To manage this, the commission directed the state to pay this total in advance quarterly instalments of Rs 6,577.56 crore.