Consumers still waiting for relief from high electricity costs in Madhya Pradesh

By Raj Kumar Sinha* 

Electricity in Madhya Pradesh is among the most expensive in India. The root of this problem lies in the lack of transparent regulation and monitoring of power production and distribution. Instead of protecting public interest, government energy policies have failed to take a pro-people stance.

In 2003, the Madhya Pradesh government formed separate power companies to address the losses incurred by the state electricity board. These companies blamed two factors for the financial crisis—excess power availability (surplus) and power theft. In 2005, long-term power purchase agreements were signed with private producers, locking the state into 25-year contracts. As per these agreements, the government must pay a fixed charge regardless of whether it purchases electricity or not.

The result? Consumers are now bearing the financial burden of these flawed decisions. Due to over-contracting, the state ends up paying crores annually for unused electricity. Between 2020 and 2022 alone, the state paid ₹1,773 crore as fixed charges to power plants without purchasing a single unit from them. Meanwhile, common consumers continue to pay inflated bills, comprising energy charges, fixed charges, fuel cost adjustments, and electricity duty. All these increase in proportion when tariff rates are raised.

The mismanagement of power companies directly affects the public. Despite decisions made in corporate boardrooms, the cost of inefficiency is passed onto the consumer. Although power tariffs are officially revised once a year, companies exploit the Fuel Cost Adjustment (FCA) clause to hike prices every quarter. Effective April 1, 2025, a 3.46% tariff hike came into effect. For 2025–26, companies requested ₹58,744 crore from the regulatory commission, which approved ₹57,732.6 crore.

Electricity expert Rajendra Agrawal points out that in 2023–24, companies earned and spent ₹54,637 crore, breaking even. Yet, they’ve sought more funds for the coming year without clear justification. According to him, the companies are not currently in deficit, and hence, a tariff hike is unwarranted.

Adding to this is the Fuel and Power Purchase Adjustment (FPA) charge—4.67% of the energy charge is now being levied as a surcharge. For an average consumer, this translates into an additional ₹50 on every 100 units consumed. The companies will also increase the security deposit in upcoming billing cycles, based on last year’s 20% rise in electricity consumption. This amount is calculated based on the average of 45 days’ consumption and adjusted per the prevailing tariff.

Shockingly, despite crores allocated for maintenance, many regional distribution companies have failed to utilize their budgets. In 2023–24, the East Zone (Jabalpur) was allocated ₹289.64 crore but spent only ₹192.10 crore. The Central Zone (Bhopal) used just 50% of its budget, while the West Zone (Indore) spent 101%. This funding was meant to ensure reliable service, maintain power lines, and provide safety gear to linemen, but the money remains underutilized.

As a result, even mild rain or wind now leads to power outages. The number of faults and trippings has risen with the onset of the monsoon. The failure to carry out routine maintenance has put an additional strain on infrastructure, especially outside Indore, where other regions like Bhopal and Jabalpur neglected upkeep despite receiving adequate funds.

Ultimately, this electricity sleight-of-hand always ends up burdening the common citizen. Power companies are paying private producers thousands of crores without buying a single unit of electricity, even as state-owned plants reduce their output. While the poor are being crushed by rising electricity costs, the state government continues to grant subsidies to power companies. The original intent of the 1948 Electricity Act was to make electricity a public service accessible to all. But under the Electricity Act of 2003, electricity has been turned into a profiteering business—light reserved only for the affluent.

The people of Madhya Pradesh are still waiting for real relief.

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*Bargi Dam Displaced and Affected Association