#electricitytariffs

State electricity tariffs are facing a defining test as Telangana’s regulator examines whether a massive cost escalation at Yadadri Thermal Power Station should be passed on to consumers. The project’s revised cost, now close to Rs 36,000 crore, reflects years of delay, litigation, and infrastructure bottlenecks.

The generator maintains that the overruns were driven by extraordinary events. Covid-19 disruptions, environmental tribunal proceedings, and delayed forest clearances slowed construction and pushed commissioning back by several years. Under regulatory norms, such uncontrollable delays can be capitalised, directly influencing State electricity tariffs through higher fixed charges.

Objectors take a tougher view. They argue that many delays predate the pandemic and reflect weak coordination and planning. From this angle, allowing full recovery would dilute discipline and embed higher costs permanently into State electricity tariffs.

Interest during construction has emerged as the most sensitive element. As timelines stretched, financing costs rose sharply. Whether these costs are admitted will shape the tariff burden borne by distribution companies and consumers alike.

Beyond Telangana, the case is being tracked across Indian Power news circles. Several Coal power projects from the same vintage face similar issues. The regulatory stance adopted here could become a reference point nationally, Electricity Tariffs, Power Sector India, Regulatory Affairs. A full verified analysis is published on EnergylineIndia.com.

  The Central Electricity Regulatory Commission has delivered a clear message on tariff discipline, with the POWER REGULATOR refusing to allow legacy transmission assets to drive higher future charges. In its Jhajjar–Mundka transmission line order, CERC approved nil additional capital expenditure for both past and future tariff periods, firmly anchoring tariffs to actual investment.

The Jhajjar–Mundka 400 kV line, operational for over ten years, was assessed as a mature asset. With no new capex claimed by the owner, the POWER REGULATOR concluded that tariff recovery must taper in line with declining loan balances and depreciation schedules. The approved capital cost remains frozen, and annual fixed charges decline steadily through FY 2029.

This ruling underscores how the POWER REGULATOR views cost-plus regulation: additional capital expenditure is not a procedural formality but a substantive test of necessity, prudence, and verifiability. Routine upkeep or asset ageing cannot be repackaged as capital investment.

For beneficiaries, including discoms in Delhi and Haryana, the decision translates into lower embedded network costs and improved predictability in power procurement planning. Indirectly, the discipline exercised by the POWER REGULATOR reduces pressure on retail electricity tariffs in urban consumption centres.

The order also carries wider implications. Many interstate transmission assets commissioned during the 2008–2013 build-out phase are now in late-life recovery stages. CERC’s approach signals that future truing-up cases will not accommodate tariff inflation absent fresh investment.

For the sector, the message is unambiguous: without new assets, there will be no new tariff recovery, Power regulator, CERC tariff order, transmission tariff decline, ISTS regulation, electricity tariff discipline.

The removal of the fuel surcharge ceiling by Kerala’s power regulator represents a decisive recalibration of STATE ELECTRICITY TARIFFS, prioritising financial neutrality over ex-ante consumer caps. Through its December 2025 amendment, the Kerala State Electricity Regulatory Commission has eliminated the 10 paise per unit limit on automatic recovery of fuel and power purchase cost variations.

The earlier cap, introduced during alignment with the Electricity (Amendment) Rules, 2022, was intended as a transitional safeguard. In practice, it constrained utilities from recovering legitimate costs during periods of elevated fuel prices. KSERC’s data shows that repeated under-recoveries accumulated, forcing partial, delayed approvals and weakening the integrity of automatic adjustment. As a result, STATE ELECTRICITY TARIFFS increasingly diverged from real procurement costs.

The revised framework restores the original intent of automatic fuel surcharge mechanisms: timely and complete pass-through, balanced by ex-post true-up. Rather than limiting monthly recovery, the regulator now relies on annual prudence checks to protect consumers from over-recovery.

This shift also reflects changing market conditions. Greater domestic coal supply stability and moderated fuel prices have reduced extreme volatility, making rigid numerical caps less defensible. For distribution utilities, the amendment improves liquidity and reduces regulatory uncertainty. For consumers, STATE ELECTRICITY TARIFFS may now fluctuate more visibly month to month, but without the backlog of deferred recoveries.

From a policy standpoint, Kerala’s move signals maturity in tariff design, favouring predictable, rule-based mechanisms over ad-hoc intervention. Other states still operating with hybrid or capped frameworks may now face pressure to follow suit, State electricity tariffs, Kerala tariff regulation, fuel surcharge recovery, power tariff amendment, electricity pricing India.