APERC Proposes Removal Of FPPCA Cap To Enable Monthly Cost-Reflective Power Tariffs In Andhra Pradesh

The Andhra Pradesh Electricity Regulatory Commission (APERC) has issued a draft regulation proposing major changes in the way fuel and power purchase costs are recovered from electricity consumers in the state. Dated February 18, 2026, the proposed Eighth Amendment to Regulation No. 4 of 2005 seeks to remove the existing cap on the monthly Fuel and Power Purchase Cost Adjustment (FPPCA) charge.

At present, the monthly FPPCA pass-through is capped at Rs. 0.4 per unit. If the actual cost exceeds this limit, the extra amount is not collected immediately. Instead, it is carried forward and later recovered through a “true-up” order issued after the end of the financial year. According to the Commission, this system has created several problems for consumers as well as power distribution companies.

One of the main concerns is tariff shock. Since the additional cost is collected much later, consumers often receive large and unexpected charges long after they have used the electricity. This delay reduces trust in the billing system. Industrial consumers are also affected because many of them operate under fixed-price contracts. They cannot recover these unexpected costs from goods already sold, which affects their competitiveness.

The Commission also pointed out issues faced by tenants. In some cases, new tenants are asked to pay true-up charges related to electricity consumed by previous occupants, leading to disputes. At the same time, distribution companies, or Discoms, are forced to bear higher costs for long periods before recovery. This affects their cash flow and their ability to purchase power smoothly.

To address these concerns, APERC has proposed removing the Rs. 0.4 per unit cap. Under the new system, FPPCA will be calculated using a defined formula and will be automatically recovered or refunded in the (n+2)th month. For example, cost changes in April will be reflected in June bills. If a Discom fails to raise the FPPCA within the specified timeline, it will lose the right to recover that amount.

The draft also calls for greater transparency. Discoms must submit detailed monthly reports to the Commission and publish FPPCA details on their websites at least one week before including them in consumer bills. The adjustment will be applied uniformly across all consumer categories.

For fully subsidized consumers, such as agricultural users, the Discoms will bill the State Government for the FPPCA amount. The regulation is proposed to come into effect on April 1, 2026, across Andhra Pradesh, aiming to improve financial stability and ensure more predictable monthly billing.