TNERC Proposes New Conventional Generation Tariff Regulations For 2027–2032 Control Period In Tamil Nadu

The Tamil Nadu Electricity Regulatory Commission (TNERC) has released a draft notification for the Conventional Generation Tariff Regulations, 2026, proposing a new framework for determining tariffs for conventional power generation projects across the state. The draft was issued on June 2, 2026, and stakeholders, industry participants, and members of the public have been invited to submit their comments, suggestions, or objections by June 17, 2026.

The proposed regulations aim to create a transparent and structured tariff determination system for conventional thermal and hydroelectric generating stations operating in Tamil Nadu. The framework will cover a five-year control period from FY 2027-28 to FY 2031-32 and will govern multi-year tariff approvals, annual performance reviews, and true-up petitions during this period.

According to the draft, the regulations will apply to all existing and upcoming conventional thermal and hydroelectric power plants whose tariffs are determined by the commission. However, projects whose tariffs have been discovered through competitive bidding mechanisms and renewable energy generating stations will remain outside the scope of these regulations, as they are governed under separate regulatory frameworks.

One of the key features of the draft regulations is the replacement of the existing tariff framework introduced in 2005. TNERC stated that the updated regulations have been designed to reflect current technological developments, operational requirements, and economic conditions in the power sector. At the same time, any pending true-up petitions or legal proceedings relating to periods up to March 31, 2027, will continue to be governed by the earlier 2005 regulations.

The proposed framework provides detailed guidelines for calculating annual fixed costs of generating stations. Power producers will be required to separate their expenses into capacity charges and energy charges. Capacity charges will cover fixed costs such as depreciation, loan interest, return on equity, and operation and maintenance expenses. Energy charges will primarily account for fuel-related costs associated with electricity generation.

The draft regulations also include provisions for recovering costs related to environmental compliance and grid-support initiatives. Generating stations may seek additional tariff approval for investments in emission control equipment, sewage treatment facilities, and modifications required for flexible operation at lower load levels. However, investments made in Battery Energy Storage Systems (BESS) will not be included under conventional generation costs and will instead be regulated under separate storage-related regulations.

TNERC has also proposed performance-based operational norms covering plant availability, auxiliary power consumption, and heat rate efficiency. Under the draft mechanism, financial gains achieved through better-than-prescribed performance will be shared equally between generating companies and distribution licensees. However, losses resulting from poor performance due to controllable factors will have to be absorbed entirely by the generating company, ensuring that consumers are protected from additional financial burdens.

Following the review of stakeholder feedback, the final regulations will come into force upon publication in the Tamil Nadu Government Gazette and will remain effective until March 31, 2032.