New Delhi, Jan 21: Union Power Minister Manohar Lal on Wednesday said the proposed Electricity Amendment Bill, which introduces a cost reflective tariff framework to curb mounting losses of power distribution companies (discoms), is likely to be taken up for discussion and passage during the forthcoming Budget Session of Parliament.
Speaking at the first annual conference of the All India Discoms Association (AIDA), EDICON 2026, the minister said the cost reflective tariff provision is aimed at ensuring that all expenses incurred in supplying electricity are factored into tariffs, thereby improving the financial health of discoms.
“Discoms are a crucial link in the electricity value chain, as they directly interface with consumers. We are bringing a provision of cost reflective tariff to reduce their losses. The bill is likely to come in this Budget Session, and we will try to build consensus for its smooth passage,” Lal said.
He added that the draft National Electricity Policy 2026, for which the power ministry has invited public comments, also advocates cost reflective tariffs to address the long standing issues of debt and losses faced by discoms.
According to the minister, cost reflective tariffs would allow discoms to generate profits, which could then be used for cross-subsidisation, though strictly in accordance with prescribed rules.
Highlighting recent improvements, Lal said discoms collectively reported a Profit After Tax (PAT) of Rs 2,701 crore in FY 2024–25, marking a turnaround after years of losses. This compares with losses of Rs 25,553 crore in FY 2023–24 and Rs 67,962 crore in FY 2013–14.
He noted that Aggregate Technical and Commercial (AT&C) losses have declined from 22.62 per cent in FY 2013–14 to 15.04 per cent in FY 2024–25, while the Average Cost of Supply–Average Revenue Realised (ACS–ARR) gap has narrowed sharply from Rs 0.78 per unit to Rs 0.06 per unit over the same period.
The minister also stressed the importance of installing prepaid smart meters, particularly in government buildings. He said around 5 crore smart meters have already been installed, with a target of 20 crore.
Lal further observed that excessive regulation by power regulators has, in some cases, contributed to higher losses for discoms and called for a review of regulatory frameworks to support their financial viability. He cited a recent memorandum of understanding between a power regulator and IIT Delhi to assess the optimal level of regulation needed to ensure the sector’s sustainability.