Punjab power tariffs election-year dips and post-election hikes

Patiala: Electricity tariffs in Punjab have followed a predictable cycle over the past two decades, with consumers benefiting from freezes or cuts in election years, only to face steep, multi-fold hikes soon after polls. An analysis of tariff data (TOI) from 2002 to 2024 shows a consistent pattern of "election-year dips" followed by "post-election jump", regardless of the party in power.Successive state govts put pressure on the Punjab State Electricity Regulatory Commission (PSERC) to defer tariff hikes ahead of elections. Once a new govt took office, the worsening finances of the debt-laden Punjab State Power Corporation Limited (PSPCL) led to steep "corrective" hikes to bridge mounting revenue gaps.Under the SAD-BJP govt, led by chief minister Parkash Singh Badal, electricity tariffs were largely kept stable in the pre-election period of 2001-02. After the Congress came to power under CM Capt Amarinder Singh in 2002-03, a sharp hike was introduced to address the fiscal deficit inherited by the power utility. Tariffs then rose steadily as the govt attempted to rationalise free power, before being frozen again in 2006-07 ahead of the next assembly polls.In 2006-07, the outgoing Congress govt avoided any increase or cut to appeal to voters. After the SAD-BJP alliance returned to power in 2007-08, it announced a steep hike as PSPCL losses mounted. Over the 2007–2012 term, tariffs increased by 25–30% across different slabs.After securing a second consecutive term, the SAD-BJP govt sanctioned a significant nearly 12% tariff hike in 2012-13. Ahead of the 2017 polls, tariffs were reduced by 35-40 paise per unit for several consumer categories in 2016-17.The Congress returned to power under CM Capt Amarinder Singh in 2017-18 and imposed a retrospective hike of about 9.33% within months of assuming office. Capt Amarinder unceremoniously resigned as CM following which Charanjit Singh Channi was elevated as Punjab CM in Sept 2021. Ahead of the 2022 elections, Channi announced a Rs 3 per unit cut in domestic tariffs, a move that increased the state's subsidy burden.The Aam Aadmi Party, led by CM Bhagwant Mann, took charge in 2022 and introduced 300 units of free power for households. Despite the free power scheme, tariffs for consumers exceeding the limit and for industrial and commercial users were increased by 50–70 paise per unit, or approximately 8–10%, in 2023-24 to bridge a revenue gap exceeding Rs 6,000 crore.The analysis revealed the average cost of supply for domestic consumers stood at roughly Rs 3.00–Rs 3.50 per unit in 2002-03. By 2024-25, the average cost of supply (ACoS) surged to 715.55 paise, or Rs 7.16, per unit, marking a cumulative increase of over 110% in nominal power costs over the past two decades.To illustrate the cycle, historical data from 2002 to 2025 showed election years correlated with stagnant or declining tariffs. During the election years of 2006-07, 2016-17 and 2021-22, the state saw either zero growth or marginal reductions of 0.00%, -0.65% and -0.89% respectively. In contrast, post-election years saw "catch-up" hikes to address mounting revenue requirements, including 10.00% in 2002-03, 4.90% in 2007-08, 12.08% in 2012-13 and 9.33% in 2017-18. After the 2022 polls, an 8.64% hike was implemented in 2023-24, with ACoS reaching 7.04 Rs./Kwh before rising to 7.16 Rs./Kwh in 2024-25.Power experts said in last two decades, subsidies and free-power schemes shielded lower-income households, while the burden of election-year freezes shifted to industrial users and upper-middle-class domestic consumers through sharp post-poll corrections. It said the data underscored a political strategy where electoral optics took precedence over fiscal sustainability, and raised questions about long-term financial planning, regulatory autonomy and the cost of populist governance.MSID:: 127777186 413 |