Rising domestic power subsidy bill hits finances

The provision of free power for domestic consumers in Punjab continues to significantly strain the state government and the Punjab State Power Corporation Limited (PSPCL). Currently, 79.90 lakh domestic consumers are availing 300 units of free electricity per month, with many households obtaining double connections, further increasing the financial burden.

The domestic power subsidy, which has been expanding since the free power scheme was introduced by the Aam Aadmi Party (AAP) government in 2022, is projected to reach Rs 8,785 crore by the end of the current fiscal year. This marks a significant rise from Rs 5,739 crore in 2022-23 and Rs 7,234 crore in 2023-24. The growing subsidy is second only to the agricultural sector, which is projected to receive Rs 10,175 crore in subsidies.

An energy audit report for the first quarter of 2024-25 highlighted that the number of domestic consumers increased by 6 lakh in two years, driven largely by the bifurcation and trifurcation of power meters and new connections. Data from PSPCL also shows that 90% of domestic consumers received free electricity by December 2023, with zero bills rising steadily.

The domestic power consumption increased from 14,538 million units in 2021-22 to 17,510 million units in 2022-23, a 20% rise following the introduction of the free power scheme. The PSPCL projects a further 17% rise in consumption, reaching 20,348 million units in 2024-25.

The total subsidy bill for the fiscal year 2024-25 is estimated to be Rs 21,909 crore, comprising Rs 10,175 crore for agricultural consumers, Rs 8,785 crore for domestic categories, and Rs 2,949 crore for industrial consumers.

Amidst these rising costs, the PSEB Engineers Association has suggested reforms, including restricting subsidies for income taxpayers and public service employees and limiting subsidies to one connection per household. They have also recommended that consumers caught stealing electricity be barred from subsidies for five years.