No big cut in base power tariff likely for FY26

Against high hopes, the government has sought revision in the base electricity tariff for next fiscal year, proposing only 30 paise to a maximum of Rs2.25 per unit reduction in consumer rates under seven different scenarios. Only in one unlikely case of normal circumstances and stable exchange rate at Rs280, the average base tariff would reduce by Rs2.25 per unit in fiscal year 2025-26 to Rs24.75 from prevailing rate of about Rs27 per unit. In case of local currency depreciation to Rs300, the base tariff reduction would be around 30 paise per unit. The reduction mainly stems from lower capacity payments. The average Power Purchase Price (PPP) would be on top of about Rs8.16 to Rs9.52 per unit fuel cost, taking the total electricity price to range between Rs34 and Rs35 per unit excluding taxes, fees, duties and surcharges.