UPERC Accepts Discoms' Financial Filings But Issues Stern Warning on Tariff Proposals
The Uttar Pradesh Electricity Regulatory Commission (UPERC) has formally accepted the financial filings submitted by all five state electricity distribution companies (discoms) for the upcoming 2026-27 tariff cycle. However, the regulatory body has issued a clear warning that no tariff revision will be considered unless the utilities explicitly state the exact revision they seek in electricity rates.
Regulatory Review of Financial Submissions
The commission conducted a comprehensive review of the financial filings, which include the annual revenue requirement (ARR), true-up documentation, and annual performance review (APR) submitted by the five discoms for financial years 2024-25 and 2025-26, along with the proposed ARR for 2026-27. The ARR represents the total amount a discom requires annually to operate the electricity distribution system effectively. The true-up process involves meticulous verification of actual expenditure and revenue against previously approved figures for the past year, while APR serves as a mid-term review to assess whether utilities are adhering to the approved ARR framework.
Deficiencies in Current Petitions
In its admittance order issued on Friday, UPERC acknowledged that the petitions were filed within the stipulated timeline under the multi-year tariff (MYT) regulations of 2025. However, the commission identified a critical regulatory deficiency: the discoms failed to meet the key requirement of placing a clear and transparent tariff proposal before both the regulator and the public. The commission observed that discoms merely indicated they were facing a revenue gap and requested UPERC to take "appropriate measures" to bridge this shortfall.
The regulator firmly rejected this approach, stating unequivocally that it is not UPERC's responsibility to determine how losses should be recovered in the absence of a formal, detailed proposal from the utilities themselves. UPERC emphasized that discoms must clearly articulate their strategy for addressing projected revenue gaps—whether through tariff revision, efficiency improvements, cost rationalization, or a combination of these measures.
Specific Regulatory Directives
UPERC has directed the discoms to submit either a proposed rate schedule or a concrete, actionable plan for meeting the revenue gap. The commission explicitly warned that it would not suo motu determine tariff hikes or allow increases to be pushed indirectly through revenue gap projections without proper justification. During preliminary scrutiny, UPERC identified several deficiencies in the petitions, including issues related to:
- Billing determinants and accuracy
- Distribution losses and energy balance
- Reconciliation of power purchase costs
- Operation and maintenance expenses
- Capital expenditure planning
- Costs associated with smart metering implementation and other government schemes
The utilities have been instructed to submit detailed clarifications and additional supporting data during subsequent proceedings to address these identified gaps.
Public Consultation Process
UPERC has mandated that discoms publish public notices within three working days, outlining key details of their ARR, projected revenue gaps, associated costs, and underlying assumptions. Consumers and other stakeholders have been granted 21 days to review these notices and submit formal objections and suggestions. Public hearings on the petitions are proposed to be held across Uttar Pradesh in March, ensuring transparent stakeholder engagement in the tariff determination process.
Substantial Financial Requirements
Avadhesh Kumar Verma, member of the UPERC advisory committee and chairperson of the UP Rajya Vidyut Upbhokta Parishad, revealed significant financial details. "Power companies have collectively submitted an ARR of Rs 1,18,741 crore," he stated. This substantial amount includes Rs 85,305 crore allocated toward power purchase and Rs 3,837 crore designated for operation and maintenance of smart prepaid meters. Consumer groups have raised concerns about the latter expense, arguing that smart meter costs should not be passed on to users according to central government assurances regarding modernization initiatives.
The regulatory commission's firm stance underscores the importance of transparency and accountability in electricity tariff determination, ensuring that any potential rate revisions undergo thorough public scrutiny and proper regulatory oversight before implementation.
