After the recent rise in prices of CNG, petrol, and diesel, common consumers may now face a shock on their electricity bills as well. The Central Electricity Authority (CEA) has prepared a proposal to increase fixed monthly charges for electricity, which could raise bills even for low electricity consumers.

According to media reports, the proposal is being introduced to cover the rising costs of power distribution companies (DISCOMs).

A large number of consumers are adopting rooftop solar systems, which is affecting the revenue of DISCOMs.

If implemented, a major portion of the electricity bill will be charged as fixed charges. This means that even with low electricity consumption, consumers may have to pay higher monthly bills.

Currently, DISCOMs recover a large share of their revenue through per-unit electricity charges, while income from fixed monthly charges is relatively low. As electricity consumption decreases, the revenue of these companies is affected.

Reports indicate that expenses such as transmission infrastructure, employee salaries, network maintenance, and payments to power generation companies account for around 38% to 56% of total costs, while revenue from fixed charges is only between 9% and 20%.

In addition, industrial and high-income consumers are increasingly adopting rooftop solar, open access, and captive power systems, but still rely on the grid for backup, reducing their electricity purchases from DISCOMs and impacting their revenues.

New Framework May Be Implemented by 2030

To address this issue, the CEA has recommended a phased and balanced increase in fixed charges. According to the proposal, fixed charges for domestic and agricultural consumers could be increased up to 25% of total cost, while for industrial, commercial, and institutional consumers, this share may rise up to 100% by 2030. It has also been recommended to introduce a separate tariff structure for rooftop solar and net-metering users.

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