#grideconomics

Power transmission India is highlighting a critical pricing gap in the electricity system. While active power losses are dynamically priced across the grid, reactive power compensation remains fixed, disconnecting voltage stability from actual transmission costs.

The national framework allocates active losses based on weekly averages, reflecting real-time energy movement. In contrast, reactive energy compensation is locked at 6.00 paise per KVARH, regardless of demand, congestion, or system stress.

Grid data shows that transmission losses fluctuate with load patterns, while reactive compensation does not adjust. This creates a structural undervaluation of voltage support services provided by transmission utilities.

From a Grid stability India standpoint, utilities must invest in voltage control infrastructure without adequate financial recovery. Capacitor banks and reactors are deployed to manage fluctuations but remain undercompensated.

Insights emerging in Electricity market India suggest that renewable energy expansion is increasing volatility, further stressing the system. Static pricing fails to capture these evolving dynamics.Future Power transmission India reforms must introduce dynamic, location-based pricing for reactive power. Aligning compensation with actual grid conditions is essential for ensuring investment and maintaining reliability, Power Grid, Transmission India, Energy Policy, Grid Economics, India Power.

State distribution companies are delaying payments to wholesale generators until regulatory sanction thresholds approach, effectively converting long-term power purchase agreements into zero-interest credit facilities.

Generators operating under regulated PPAs cannot terminate contracts solely due to payment delays, preventing them from redirecting power to alternative buyers.

Recorded payment delay

The WRPC Supplementary Agenda Notes dated 06.03.2026 document a case involving Ratnagiri Gas & Power Pvt. Ltd. (RGPPL).

The generator currently carries Rs 81 crore in unpaid dues from a single distribution utility.

The delay period recorded in the document is 502 days, exceeding sixteen months.

Cash flow justification

Distribution utilities attribute payment delays to retail tariff deficits and delayed subsidy disbursements.

They also cite the Late Payment Surcharge (LPS) framework, which is intended to compensate generators for payment delays.

Financing gap

However, the regulated surcharge rarely covers the actual borrowing costs generators incur when raising emergency short-term debt to maintain fuel procurement.

Market effect

This dynamic allows distribution utilities to operate using the liquidity of wholesale generators.

Policy question

Unless the Ministry of Power modifies the Late Payment Surcharge Rules to enforce automatic escrow deductions from tariff collections before dues age beyond 90 days, distribution companies will continue to rely on generators as a working capital source.

Voltage management shows up as money. And the money is no longer moving evenly.

One region keeps absorbing VAR costs week after week. Another has learned how to earn. Most readers track demand and generation. Fewer watch how network behaviour turns voltage into recurring settlement outcomes.

More money flowed through SCED in November. But fewer generators shared it, and some regions slipped into the red. What looks like routine dispatch hides a sharper reallocation of cost and advantage.

The question isn’t who gained this month. It’s what happens when efficiency gains stop expanding but exposure keeps moving.