The Daily Brief How power prices work in India
31 snips
Sep 2, 2025 Discover how India's electricity pricing system is influenced by recent Supreme Court rulings and the complexities of DISCOM financial struggles. Explore the challenges distribution companies face, including debt and regulatory issues, and their impact on the overall economy. Delve into the stark contrasts in economic growth trends between developing and wealthier nations, highlighting the successes of South Korea and Vietnam compared to others. This insightful discussion uncovers the critical implications for India's economic landscape.
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Tariffs Are A Regulatory Function
- Tariff determination is a statutory regulatory function, not a private negotiation between power firms and DISCOMs.
- The Supreme Court ruled companies cannot raise wholesale rates without regulator approval, reinforcing transparent oversight.
Sector Split And New Regulators
- India's power sector is split into generation, transmission and distribution after the Electricity Act 2003.
- Regulators were created to set tariffs based on costs and technical analysis rather than politics.
Legacy PPAs Dominate Wholesale Supply
- Around 85% of electricity in India is sold through long-term power purchase agreements (PPAs).
- The market mixes cost-plus legacy contracts and competitively bid new capacity, creating price divergence.