Telangana Electricity Regulatory Commission Approves ₹0.13 kWh Additional Surcharge For Open Access Consumers In H1 FY27

The Telangana Electricity Regulatory Commission has issued a common order determining the Additional Surcharge (AS) applicable to Open Access (OA) consumers in the state for the first half (H1) of the financial year 2026–27, covering the period from April 1 to September 30, 2026. The order was passed following petitions submitted by the state’s power distribution utilities, Southern Power Distribution Company of Telangana Limited, and Northern Power Distribution Company of Telangana Limited.

The Additional Surcharge is a compensatory charge mandated under Section 42(4) of the Electricity Act 2003. It is imposed on consumers who procure electricity through Open Access from third-party suppliers instead of purchasing power directly from the state distribution companies. The surcharge helps recover the fixed costs incurred by DISCOMs when their contracted generation capacity remains unutilized due to such consumer migration. These unused capacities are commonly referred to as “stranded” capacity.

In their petitions, the Telangana DISCOMs proposed an Additional Surcharge of Rs. 0.59 per kWh. The utilities based their calculations on an estimated stranded capacity of 161.61 MW. They also reported paying fixed charges of Rs. 6,737.11 crore to power generators under long-term contracts. In addition, the utilities factored in transmission and distribution costs, while adjusting these costs against demand charges already collected from Open Access consumers.

During the regulatory proceedings, several stakeholders raised objections to the DISCOMs’ calculations. They argued that the utilities had not conclusively demonstrated that the stranded capacity was caused solely by Open Access transactions. According to some stakeholders, the surplus capacity could also be attributed to inefficient power procurement planning or the increasing share of renewable energy sources such as solar power, which typically generates electricity during daytime hours and may reduce demand for conventional generation during those periods.

Stakeholders also questioned the inclusion of additional pension liabilities and water charges in the fixed cost calculations submitted by the DISCOMs. These concerns prompted the Commission to conduct a detailed examination of the data submitted.

The Commission carried out a prudent verification of the claims by reconciling them with the quarterly audited financial reports of the DISCOMs for the financial year 2025–26. While the Commission accepted pension liabilities and water charges as legitimate components of fixed costs, it revised several financial parameters downward after reviewing the audited records.

The admissible fixed charges were reduced from the claimed ₹6,737.11 crore to ₹6,453.73 crore. Transmission charges were also revised from ₹0.50 per kWh to ₹0.46 per kWh. After making these adjustments and accounting for demand charges already recovered from Open Access consumers, the Commission determined that the net recoverable stranded charges amounted to ₹6.04 crore, significantly lower than the DISCOMs’ initial claim of ₹26.67 crore.

Based on this revised analysis, the Commission approved an Additional Surcharge of ₹0.13 per kWh for the first half of FY 2026–27. This approved rate is substantially lower than the ₹0.59 per kWh requested by the DISCOMs.

The surcharge will be applicable to consumers availing power through Open Access from sources other than the state DISCOMs during the period from April to September 2026. However, the order clarifies that the surcharge will not apply to consumers using power for captive consumption or those covered under specific exemptions granted by the government.