Draft National Electricity Policy 2026 Proposes Monthly Power Cost Adjustment For Consumers: MoS Naik

New Delhi, Aug 11 (KNN) The Draft National Electricity Policy, 2026 proposes an automatic monthly mechanism to pass changes in power purchase costs, including fuel costs, on to electricity consumers, Minister of State for Power Shripad Naik said.

FPPCA Mechanism Under Draft Policy

In a written reply to the Rajya Sabha on Monday, Naik noted that the draft policy proposes an automatic monthly Fuel and Power Purchase Cost Adjustment (FPPCA) mechanism to reflect changes in the cost incurred by electricity distribution companies (DISCOMs) while procuring power, ANI reported.

The policy also proposes a stabilisation fund to moderate the impact of fluctuations in power purchase costs on consumers. The government clarified that the proposal is part of the draft policy and does not represent a new nationwide tariff system that has already come into effect, he added.

Focus on Cost-Reflective Tariffs

Naik highlighted that the draft policy proposes progressively recovering fixed costs through demand or fixed charges so that electricity tariffs better reflect the cost of supply while encouraging efficient consumption.

It also calls on State Electricity Regulatory Commissions (SERCs) to ensure that tariffs progressively reflect the prudent cost of electricity supply without creating regulatory assets. 

The policy proposes timely annual tariff revisions and indexation-based mechanisms, where appropriate, if tariff orders are not issued within stipulated timelines.

State Regulators Continue to Set Tariffs

At present, retail electricity tariffs are determined by respective SERCs under the Electricity Act, 2003. These regulators consider costs related to power procurement, transmission, wheeling and supply while determining tariffs. State governments can also provide subsidies to specified consumer categories, including households, he noted.

Changes in fuel prices or electricity demand are assessed by state regulators under applicable tariff regulations, including FPPCA mechanisms, with any recovery through tariffs subject to regulatory scrutiny, the minister added.

Focus on Reliable 24x7 Power Supply

The draft policy also aims to ensure reliable, affordable and quality 24x7 electricity supply while strengthening consumer grievance redressal through online complaint registration, tracking and disposal systems, Naik said.

According to the government, average electricity supply in rural areas increased to 22.6 hours per day in FY26 from 12.5 hours in FY14. In urban areas, average supply rose to 23.4 hours from 22.1 hours during the same period.

(KNN Bureau)