The Tamil Nadu Electricity Regulatory Commission (TNERC) has issued Order No. 5 of 2026 approving an additional provisional tariff subsidy of ₹1545.14 crore for the financial year 2026–27. The order was issued following a policy directive from the Government of Tamil Nadu under G.O. (Ms) No. 50 dated May 10, 2026, which expanded free electricity benefits for domestic consumers in the state.
Under the revised policy, domestic households consuming up to 500 units of electricity in a bimonthly billing cycle will now receive 200 units of free electricity instead of the earlier lower benefit. The move is aimed at providing greater financial relief to lower and middle-income households facing rising electricity costs. However, for consumers whose consumption exceeds the 500-unit limit in a billing cycle, the existing structure remains unchanged, and they will continue to receive only 100 units of free electricity bimonthly.
The Tamil Nadu Power Distribution Corporation Ltd. (TNPDCL) had informed the Commission that the state government has committed to compensating the utility for the revenue loss arising from this subsidy scheme, with an annual allocation of ₹1730 crore. However, since the revised policy came into effect from May 10, 2026, and not from the beginning of the financial year, the compensation required for the remaining period of the year—covering 326 days up to March 31, 2027—has been recalculated at ₹1545.14 crore.
Based on this calculation, TNPDCL requested approval from the regulator for the provisional subsidy amount to ensure financial stability and uninterrupted power distribution operations. After reviewing the submission, TNERC approved the requested subsidy and also directed a structured payment mechanism to ensure timely fund flow from the state government to the distribution company.
As per the approved schedule, the first installment of ₹246.47 crore, covering the period from May 10, 2026, to June 30, 2026, is to be released immediately. The second and third quarterly payments, each amounting to ₹436.05 crore, are scheduled for release by June 30, 2026, and September 30, 2026, respectively. The final installment of ₹426.57 crore for the fourth quarter must be paid by December 31, 2026. This phased payment structure is intended to avoid cash flow stress for the utility while ensuring continuous subsidy support.
TNERC has clarified that the approved amount is provisional in nature. A final reconciliation will be carried out at a later stage based on actual consumption data provided by TNPDCL during the financial year. Any differences between estimated and actual subsidy requirements will be adjusted accordingly to ensure accuracy and transparency in government support and accounting.
The order highlights the state’s continued focus on extending electricity affordability to households while balancing the financial requirements of the distribution utility.
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