Cuttack: The Odisha Electricity Regulatory Commission (OERC) has concluded public hearings regarding electricity tariff determination for the financial year 2025-26. According to reports, an increase in electricity tariffs seems almost certain.
In Odisha, the power distribution sector was privatized to bring reforms. Previously, when electricity rates were proposed for an increase, distribution companies claimed that commercial and industrial losses forced them to bear financial burdens. As per the annual report of the Energy Department, before privatization in the year 2000, the sector’s losses were 57%, which has now reduced to 18% by December 2023.
Over the past five years, improvements in the electricity distribution system, reduction in power theft, and an increase in bill collection rates have significantly reduced these losses. Despite this, distribution companies have applied for a tariff hike.
The Root Cause: GRIDCO’s Financial Struggles
The main issue lies with GRIDCO, which has set a target of generating higher revenue in the upcoming financial year by selling more electricity to distribution companies. Reports suggest that GRIDCO is drowning in financial distress. Its long-standing financial weakness stems from keeping electricity tariffs unchanged for years and inadequate revenue collection before Tata Power took over distribution operations.
In response, the Odisha government has allocated ₹512 crore in the 2025-26 budget as working capital loans to support GRIDCO. However, unless the government continues injecting financial aid every year, GRIDCO’s debt burden will not ease.
If electricity rates increase, it could worsen inflation and affect consumers. Therefore, the government is urged to intervene and keep electricity tariffs stable for the upcoming financial year.