Power secretary asks discoms to cut supply costs, rethink coal sourcing

Power secretary Pankaj Agarwal has asked distribution utilities to cut electricity supply costs by securing cheaper coal, rationalising transmission charges and simplifying tariffs, amid concerns over

Power utilities need to seriously introspect on optimising the cost of supply by participating in coal auctions to secure fuel at lower prices rather than waiting for the government to allocate coal at a notified rate, Power Secretary Pankaj Agarwal said on Tuesday.

Why does the government want discoms to cut supply costs?

“Honourable Prime Minister has clearly said that our cost of supply must be affordable,” Agarwal said while speaking at an event here. “Even after adjusting for cross-subsidy, our industrial tariff is $95 per megawatt hour. In comparison, power costs in China, Vietnam, Thailand or the US range between $60 and $80 per megawatt hour,” he said.

What issues did the power secretary flag on coal sourcing and tariffs?

Agarwal expressed concern over the high energy charge in the tariff of projects located in coal-bearing areas, saying there is an urgent need to rationalise the way coal is sourced. He said power utilities must focus on better resource adequacy planning.

What reforms were suggested on transmission costs and tariff structure?

The secretary said discoms must examine the trajectory of inter-state transmission costs, which are very high, and also review tariff categories for consumers to simplify the tariff structure.

What did Agarwal say on smart meters and data sharing?

Agarwal said that while installing smart meters, distribution utilities should share data in usable formats, with appropriate anonymisation, to address privacy concerns. “We are also coming out with a data-sharing policy, and we would ensure it is finalised by the end of March,” he said.

What did the power minister say at the event?

Speaking at the same event, Power Minister Manohar Lal said there must be incentives to cover even small consumers through prepaid smart meters. He also said the government is likely to introduce a provision for cost-reflective tariffs in the Electricity (Amendment) Bill, 2026, which is expected to be tabled in Parliament soon.