Key Highlights
- The National Electricity Policy (NEP) 2026 aims to address high losses and debt of discoms, non-cost-reflective tariffs, and high cross-subsidisation.
- A non-cost-reflective tariff is a pricing structure in which the rate charged to a particular consumer category is below the utility’s average cost of generating, transmitting, and distributing electricity to that category.
- While cross-subsidisation is a pricing mechanism in which certain consumer groups (industrial, commercial, and higher-income domestic users) are charged tariffs above the cost of supply to offset and subsidise the lower tariffs provided to other groups, such as agricultural consumers and low-income households.
- The draft also seeks to foster competition, ensure grid resilience to integrate increased shares of variable renewable energy, and provide consumer-centric services with demand-side interventions, the Ministry said in a statement.
- The reform is being taken despite several achievements made since 2005; the power sector still has challenges, especially in the distribution segment, the Ministry had said earlier.
