FRAMEWORK FOR BALANCING ELECTRICITY FINANCIAL SUSTAINABILITY AND AFFORDABILITY

The Ministry of Power has outlined a comprehensive framework under the Electricity Act, 2003 to balance financial sustainability of the electricity sector with consumer affordability. The framework includes the National Electricity Policy, Tariff Policy, and related legislation, and mandates that State Electricity Regulatory Commissions set retail tariffs based on procurement, transmission, and supply costs, with subsidies allowed for specific consumer classes. The Draft National Electricity Policy, 2026 proposes Resource Adequacy Plans, progressive cost‑recovery through demand/fixed charges, automatic Fuel and Power Purchase Cost Adjustment (FPPCA) mechanisms, and a stabilisation fund to cushion cost fluctuations. It also emphasizes consumer protection via the Electricity (Rights of Consumers) Rules, 2020, and promotes renewable integration, smart metering, loss reduction, and energy storage through schemes such as the Revamped Distribution Sector Scheme (RDSS) and various capacity‑addition programmes for thermal, hydro, nuclear, and renewable generation.