Explained: Why power costs vary across states

Mains Paper 3 : Infrastructure: Energy, Ports, Roads, Airports, Railways Etc. |

From UPSC perspective, the following things are important :

Prelims level : Not Much

Mains level : Discrepancies in Indian power sector

Recently a MP from Rajya Sabha suggested that power tariffs should be uniform across the country so that affordable power is available to all.
He complained that consumers in Punjab paid Rs 8 per unit of electricity, much more than consumers in neighbouring Himachal Pradesh and J&K.

Power tariffs across state

The electricity tariff paid by consumers in each state is directly reflective of the cost of power procurement by the power distribution companies (discoms) in the state.
There are state-specific factors for this.
So, states such as Jharkhand or Odisha or Chhattisgarh, which have had coal-fired thermal capacity, would typically have lower tariffs because of the base-load capacities that they possess.
Or, states such as Himachal or Uttarakhand would have low tariffs because of hydropower capacities .
On the other hand, a state like Gujarat, which has capacities based on imported coal, will have comparatively higher tariffs.

So is the idea of having a flat countrywide rate feasible?

The State Electricity Regulatory Commissions (SERCs) decide on the power tariff after utilities file their cost of power with the regulators.
Because power tariffs entail a number of state-specific factors a uniform nationwide tariff is a proposition that would be difficult to implement.
Electricity was a state subject and there has to be consensus for uniform power tariffs among state players.

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