PSERC Releases Draft MYT Regulations 2025 for Tariff Framework from FY 2026 to 2029 in Punjab

Introduction

The Punjab State Electricity Regulatory Commission (PSERC) has established a detailed and comprehensive framework for electricity tariff determination through its Draft Multi-Year Tariff (MYT) Regulations, 2025, which will govern tariff setting for generation, transmission, wheeling, and retail supply during the fourth control period spanning from April 1, 2026, to March 31, 2029.[1]

Explanation (Key Points)

The MYT framework operates on a comprehensive three-year control period basis that requires electricity sector entities to submit detailed business plans and tariff petitions well in advance of the control period commencement.

Regulatory scope and applicability encompass tariff determination for multiple categories including generation plants owned by distribution licensees (excluding renewable energy sources), generating companies supplying electricity to distribution licensees, intra-state transmission services provided by transmission licensees, State Load Despatch Centre (SLDC) operational fees, wheeling and retail supply services by distribution licensees, and surcharges applicable under the open access framework. Notably, renewable energy generation is specifically excluded from these regulations.

The regulations establish clear segregation requirements for multi-segment operators, mandating that distribution licensees involved in generation activities maintain separate accounts and revenue requirement projections for each operational segment including generation, wheeling, and retail supply. Similarly, the State Transmission Utility (STU) must maintain separate accounting for transmission services and SLDC operations.

Uncontrollable items such as power purchase costs, fuel prices, and various taxes are passed through directly in tariffs, recognizing that utilities have limited control over these cost elements. Normative parameters including auxiliary consumption, heat rate, and station load factor follow predefined ceilings established by the Commission.

Capital investment planning receives detailed regulatory attention through requirements for submission by August 20 preceding the start of each control period. Investment plans must include comprehensive technical and financial details for both ongoing and proposed schemes, with Commission approval based on prudence checks and alignment with state infrastructure needs and development priorities. Projects exceeding ₹250 crore in intra-state transmission must be executed through tariff-based competitive bidding unless specifically exempted for strategic or technical reasons, promoting cost-effectiveness and competitive procurement practices.

Tariff determination components for generating companies include comprehensive cost elements such as return on equity, depreciation, interest on loans and working capital, operations and maintenance (O&M) expenses, and taxes excluding income tax. The return on equity is capped at 15.5% for most generating facilities and 16.5% for certain hydro plants, providing reasonable returns while protecting consumer interests. For transmission and SLDC operations, similar cost components are included along with additional provisions for system operation charges and reactive power compensation services.

Conclusion

PSERC’s Draft MYT Regulations for 2025 establish a comprehensive and sophisticated framework for tariff determination that effectively balances regulatory certainty with operational flexibility across Punjab’s electricity sector. The three-year control period approach provides stakeholders with essential predictability for strategic planning and investment decisions while maintaining necessary provisions for adjustments through comprehensive truing-up mechanisms.

The regulations’ detailed procedures for capital investment planning, cost categorization, and financial structure guidelines create a robust foundation for efficient and transparent tariff determination processes. Through clear timelines, comprehensive cost recovery mechanisms, and performance monitoring provisions, these regulations support Punjab’s electricity sector development while ensuring cost-effective service delivery and appropriate consumer protection throughout the 2026-2029 control period.