New power policy draft may reach Cabinet in August

New Delhi: The power ministry is set to seek cabinet approval next month for the first overhaul of the National Electricity Policy since 2005, paving way for shared distribution networks norms and unbundling of state transmission utilities, people familiar with the matter said. "The proposal could be taken to the cabinet by August," one of the persons told ET.

The ministry in January circulated a draft policy, which targets per capita electricity consumption of 2,000 kWh by 2030 and over 4,000 kWh by 2047.

The draft proposes linking electricity tariffs to a suitable inflation index, allowing automatic annual revisions if state regulators fail to issue fresh tariff orders. It also recommends progressively recovering fixed costs through demand charges and reducing cross-subsidies.


It proposes exempting the manufacturing sector, railways and metro rail systems from cross-subsidy surcharges.

Dedicated Platforms

This would improve the competitiveness of the Indian industry and lower logistics costs.

The draft also backs allowing state regulators, in consultation with state governments, to exempt distribution licensees from the universal service obligation for consumers with a contracted load of 1 MW and above to promote competition in distribution.

The proposed shared distribution networks had earlier drawn much resistance from states as it supports parallel distribution licensing.

The draft also recommends establishing a distribution system operator that aligns with the requirement for multiple distribution licensees. A risk-sharing and compensation mechanism is to be formulated to address mismatches in commissioning timelines between generation and transmission projects, it said.

India's power sector will require approximately ₹50 lakh crore by 2032 and ₹200 lakh crore by 2047 for generation, transmission, and distribution. For this, dedicated platforms and energy-specific funds may be established under NaBFID and NIIF, as per the draft policy.