Ministry of Power Prioritises Financially Disciplined States and Clears Discom Dues for Power Allocation from Central Pool

The Ministry of Power has issued an order stating that electricity from the central pool will not be allocated to states and Union Territories (UTs) that impose taxes on clean energy projects, hinder the inter-state flow of power, and have not cleared subsidy dues on electricity tariff.

The ministry will examine certain aspects before allocating power from the unallocated quota of Central Generating Stations to any state/UT. The non-creation of regulatory assets, timely payment of declared subsidies, and absence of tax/cess on hydro-power or renewable energy projects that could obstruct inter-state flow of electricity will be considered. The allocation of power to any state/UT found violative in any of the above criteria will be strongly disincentivized.

The Ministry of Power allocates power generation capacity to states from its unallocated quota in Central Generating Stations. The order further emphasized that priority will be given to the allocation of power to states that maintain financial discipline and refrain from imposing taxes or duties on the flow of power to other states.

Regulatory assets are acknowledged by power regulators when the tariffs imposed on electricity consumers do not cover the power purchase costs of distribution companies. Therefore, the states that have regulatory assets will not receive power allocation from the central pool.

The order is expected to encourage states to maintain financial discipline and promote the use of clean energy projects, ensuring timely payments of subsidy dues, and refraining from imposing taxes on hydro-power or renewable energy projects.