Regulatory Showdown Forces Punjab Power Utility to Withdraw Controversial Policy
In a significant development for Punjab's power sector, the Punjab State Power Corporation Limited (PSPCL) has withdrawn a controversial commercial policy following a sharp confrontation with the state's electricity regulatory authority. The Punjab State Electricity Regulatory Commission (PSERC) had declared the policy invalid and initiated punitive legal action, compelling the public utility to retract its circular.
The Controversial Circular and Its Provisions
The dispute centered on Commercial Circular No. 01/2026, issued by PSPCL on January 8 of this year. This circular introduced a facility for high-tension (HT) and extra-high-tension (EHT) electricity consumers, allowing groups of subsidiary companies, partnerships, or trusts with a combined contract demand exceeding 5,000 kVA to jointly install and maintain 33 kV or higher cluster sub-stations. Crucially, this permission extended to situations where the participating consumers operated from geographically separate, non-contiguous premises.
Under the framework outlined in the circular, PSPCL would construct 11 kV feeders from the cluster sub-station to individual participating consumers at their own cost. The policy imposed specific technical requirements: feeder lengths were capped at 500 meters and required certification by a technical committee. Only underground XLPE cables were permitted, with overhead conductors explicitly barred.
Regulatory Objections and Legal Grounds
PSERC swiftly objected to the circular, noting that it had already rejected a similar proposal in October 2025 on legal grounds. The commission asserted that PSPCL had attempted to amend binding electricity regulations through administrative circulars, an action it deemed impermissible under the Electricity Act, 2003.
In a directive issued on February 3, PSERC declared the circular "void ab initio" (void from the beginning) and ordered its immediate withdrawal. The commission emphasized that even without formal revocation, the policy would be treated as legally non-existent.
Escalation and Legal Proceedings
The confrontation escalated on February 16 when PSERC initiated a suo-motu petition under Section 142 of the Electricity Act after PSPCL failed to respond within the stipulated period or withdraw the circular. The commission cited "willful contravention" of regulations, with the provision carrying penalties of up to Rs 1 lakh per violation along with continuing daily fines. A formal hearing was scheduled for February 25 to address the matter.
Withdrawal and Sector Implications
However, on February 17, the Chief Engineer/Commercial at PSPCL issued a memorandum withdrawing Commercial Circular No. 01/2026 with immediate effect. This withdrawal means that cluster sub-station arrangements across non-contiguous properties remain impermissible unless formally approved through proper regulatory amendment processes.
Power experts and industry observers have noted that this development reinforces regulatory discipline within the power sector. It clarifies that utilities cannot introduce policy shifts that effectively override established rules without going through proper regulatory channels. The episode serves as a reminder of the checks and balances in place within India's electricity governance framework.
Key Timeline of Events
- October 2025: PSERC rejects PSPCL's initial proposal for cluster sub-stations serving non-contiguous premises
- January 8, 2026: PSPCL issues Commercial Circular No. 01/2026 authorizing the facility
- February 3, 2026: PSERC declares the circular void and orders its withdrawal
- February 16, 2026: PSERC initiates suo-motu proceedings for non-compliance
- February 17, 2026: PSPCL withdraws the circular with immediate effect
