#discomreform

Normally, medium-term power contracts are assumed to provide predictable revenue without the rigidity of long-term regulated supply.

But the KSK Mahanadi dispute with Andhra Pradesh Discoms shows how fragile that assumption can be.

✅ CERC’s order dated 28 January 2026 consolidates multiple petitions into a single adjudicatory track.

The dispute relates to a 400 MW Case-I PPA signed in 2012 and amended thereafter.

⚠️ KSK alleges systematic invoice deductions, tariff non-payment, and lapses in payment security.

Claims across billing periods reportedly run into several hundred crores.

Andhra Pradesh’s bifurcation added complexity in allocation and contractual amendments.

🔎 The matter spent years locked in jurisdictional battles across courts and appellate forums.

CERC has now reiterated its authority over composite-scheme PPA disputes.

A contested termination notice issued in December 2020 deepens contractual uncertainty.

❌ Medium-term PPAs often lack the enforcement depth of long-term arrangements, making payment stress more disruptive.

Consolidation signals that termination and tariff performance cannot be separated cleanly.

With the dispute back before the regulator, the stakes remain substantial.

Will this case influence how termination leverage is used in future PPA conflicts? And what does it reveal about the real limits of payment security in medium-term contracts?

Power sector reforms took a policy-signalling turn after the draft NEP 2026 proposed a possible exemption for large consumers from universal service obligations. The move hints at a future where high-load users may no longer be structurally tied to subsidising retail and low-income segments.

Universal service obligations have anchored distribution economics for decades. Large consumers cross-subsidise lower-paying users and help stabilise utility revenues. The draft policy introduces the possibility that these consumers could operate outside the obligation framework, altering tariff design and subsidy logic.

The document is notably silent on thresholds, transition pathways or compensatory arrangements. It does not explain how regulators would redesign tariffs if high-load users exit the pool. There is also no guidance on how states would replace lost cross-subsidy inflows.

No binding timeline or mandatory implementation structure is outlined. The provision is framed as an enabling direction rather than a command. Consultations are expected to test political and fiscal feasibility, particularly in states where discom finances remain weak.

Sector observers caution that execution without parallel subsidy reform could widen stress at the distribution level. Tariff shocks for remaining consumers are a plausible outcome if revenue gaps are not addressed structurally.

For Power sector reforms, the draft signals deeper market segmentation and a shift toward consumer choice. The issue is now prominent in News on power sector and Indian Power news, NEP 2026, Electricity Policy, Tariffs, Discom Reform, India Energy.Full verified coverage is available on EnergylineIndia.com.