New electricity late payment surcharge rules announced – but consumer electricity bills may not decrease

Mar 2, 2021, 10:07 IST

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The Ministry of Power has notified Electricity (Late Payment Surcharge) Rules, 2021, reducing the interest rate on late payments by power distribution companies (discoms). However, if you’re wondering if these new rules will reduce your electricity bills, then you should know that this is not likely.

The new rules are aimed at improving the liquidity of power discoms by reducing the interest charged on late payment of dues to power producing companies. This interest burden is being reduced from the existing rate of 18% to 13.15% – which is the State Bank of India’s base lending rate of 8.15% as on April 1, 2020, plus 5%.

What is late payment surcharge?
It is interest payable on the amount outstanding after the due date.
Who is liable to pay surcharge?
Power distribution companies (discom) and power transmission licensee.
How much are the over-dues of power discoms?
As of August 2020, over-dues of power discoms touched ₹1.2 lakh crore.
How will this help power discoms?
This will reduce interest liability of discoms, thereby improving their liquidity.
Does this impact me as a consumer?
No, consumers are not impacted by these rules.
Will my electricity bills reduce?
This is primarily aimed at improving liquidity of power discoms, so your electricity bills won’t reduce.
Will discoms pass on this benefit to consumers?
This is entirely at the discretion of the discoms.
Who will receive the late payment surcharge?
Power producers will receive the late payment surcharge.
Who are these power producers?
Some of these power producers include NTPC, Adani Power, Bajaj Lalitpur, GMR Energy among others.
What is the rate of interest?
For 2020, at SBI Base Lending Rate of 8.15% plus 5%, totaling to 13.15%.