The Punjab State Electricity Regulatory Commission (PSERC) has released the Draft Multi-Year Tariff (MYT) Regulations, 2025, which will govern the determination of generation, transmission, wheeling, and retail supply tariffs for the fourth control period. These regulations are issued under the powers granted by the Electricity Act, 2003. The draft outlines a detailed framework for tariff setting in the state of Punjab and will come into effect from April 1, 2026, lasting until March 31, 2029.
These regulations apply to the tariff determination for various categories including generation plants owned by distribution licensees (excluding renewable energy sources), generating companies supplying to distribution licensees, intra-state transmission by transmission licensees, State Load Despatch Centre (SLDC) fees, wheeling and retail supply by distribution licensees, and surcharges under the open access framework. Renewable energy generation is excluded from this regulation.
The MYT framework is based on a three-year control period and requires entities to file business plans and tariff petitions in advance. Distribution licensees who are also involved in a generation will need to prepare separate accounts and revenue requirement projections for each segment — generation, wheeling, and retail supply. Similarly, the State Transmission Utility (STU) must separate accounts for transmission and SLDC operations.
The draft regulation clearly classifies items of aggregate revenue requirement (ARR) into controllable, normative, and uncontrollable categories. For instance, power purchase costs, fuel prices, and taxes are considered uncontrollable and will be passed through in the tariffs. Parameters like auxiliary consumption, heat rate, and station load factor are normative and will follow defined ceilings.
The MYT regulations prescribe that capital investment plans, to be submitted by August 20 preceding the start of the control period, must include ongoing and proposed schemes with technical and financial details. Approval of capital investment will be based on prudence checks and plans aligned with state needs. Projects over ₹250 crore in intra-state transmission must be executed through tariff-based competitive bidding unless exempted for strategic reasons.
For tariff determination, the components of Annual Fixed Cost for generators include return on equity, depreciation, interest on loans and working capital, O&M expenses, and taxes (excluding income tax). The return on equity is capped at 15.5% for most cases, and 16.5% for certain hydro plants. For transmission and SLDC, similar cost components are included, along with additional provisions for system operation charges and reactive power compensation.
Depreciation is to be calculated on the approved capital cost after reducing de-capitalized assets, and land cost is excluded. The normative debt-equity ratio for new projects is set at 70:30, and equity in excess of 30% will be treated as a normative loan.
The regulations also define procedures for the truing-up of ARR based on audited accounts, carrying cost adjustments, and tariff reset petitions. Stakeholders are expected to file MYT petitions by November 30 prior to the control period and true-up petitions annually.
There are no specific provisions for Earnest Money Deposit (EMD) or Performance Bank Guarantee (PBG) in these regulations as they pertain to tariff determination and not project execution.
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