Explained: The Cost and Benefits of AAP’s Free Electricity Program in Punjab

At the end of its first month in office, the AAP government of Punjab announced on Saturday April 16 300 units of free electricity for consumers statewide starting July 1. This was one of the main promises the party made ahead of the Assembly elections.

What is this diagram? How many consumers will benefit? What is the burden this will place on the Punjab State Power Corporation Limited (PSPCL)? The Indian Express Explain :

What is AAP’s new electricity program in Punjab?

National party official and Delhi Chief Minister Arvind Kejriwal had announced a new power scheme for the state on June 29, 2021, ahead of Assembly elections. He had said that if the PAA were elected to power in Punjab, the government would give every household in the state free electricity up to 300 units.

He had even declared that if the AAP formed the government, the promise of exemption from the electricity bill would be fulfilled immediately.

The electricity program will likely be similar to the one put in place in Delhi by the AAP government.

How many consumers will Punjab’s new electricity system benefit?

There are 73.80 lakh households that receive electricity through the PSPCL, according to its data.

According to the power consumption pattern of past billing cycles, nearly 62.25 lakh consume less than 300 units per month. It means, nearly 84% will directly benefit from this program, revealed a PSPCL official during a conversation with The Indian Express.

Therefore, 84% of PSPCL consumers are unlikely to pay anything if the flat fee is also removed.

As demand varies according to the seasons, what is the average electricity consumption?

According to PSPCL officials, there are seasonal variations in electricity consumption; it increases in summer and decreases in winter.

Consequently, consumers in the less than 300 units per month bracket increase in winter and decrease slightly in summer. Considering this, the average number of households that consume up to 300 units is 62.25 lakh. The remaining 11.55 lakh consume over 300 units per month.

The average is calculated based on historical data, which shows that the maximum households in a billing cycle that consumed electricity up to 300 units reached 69.31 lakh and a minimum of 51.23 lakh. Hence, the average was calculated at 62.25 lakh.

Similarly, there was a high of 22.57 lakh households using more than 300 units per month in a billing cycle, and a low of 4.49 lakh, leading to an average of 11.55 lakh.

Average consumption was 137 units per month in the up to 300 unit category, according to historical PSPCL data.

What are the existing annual energy subsidies for consumers?

At present, domestic consumers receive a subsidy of Rs 3,998 crore per year.

Of this, Rs 1,657 crore is for SC/BC/BPL consumers, or 21.83 lakh. They get the first 200 units per month for free.

The other subsidy of Rs 2,341 crore is provided to domestic consumers of 64.46 lakh having a load of up to 7 KW.

The previous government of Charanjit Singh Channi reduced electricity bills by Rs 3 per unit in various slabs for these consumers from 1 November 2021, and the AAP government postponed this subsidy.

What will be the impact of the new electricity regime?

Looking at historical data, if the power consumption pattern continues like this – with consumers using an average of 137 units per month – the Punjab government will have to shoulder an electricity subsidy of Rs 5,500 crore, including previous grants. Saturday’s announcement will add a subsidy burden of around Rs 1,502 crore.

What do PSPCL officials think of the new power system in Punjab?

According to PSPCL officials, consumers who used to use 150 units per month are likely to now consume up to 300 units because it’s free. In addition, mixed families can have their meters split to benefit from this scheme. In addition, many others consuming just over 300 units per month could reduce their consumption to fall into this range.


So, could the subsidy expenditure for the Punjab government then increase?

Yes. According to PSPCL calculations, if all consumers use the full 300 units of free energy at a rate of Rs. basic fixed charges of 459 rupees. As such, the total would stand at Rs 11,911 crore every year.

For consumers of about 11.55 lakh who use more than 300 units of electricity, the annual subsidy expenditure amounts to Rs 2,427 crore, including fixed charges of Rs 302 crore.

Thus, the estimated annual subsidy expenditure for the two categories (about 73.80 lakh consumers) would increase to Rs 14,337 crore.

Chief Minister Bhagwant Mann, in a video posted on Saturday afternoon, said: “Now SC/BC/BPL and Freedom Fighter families will receive the first 300 units per month for free, instead of the first 200 . Therefore, these consumers will only be charged for the additional units, i.e. if they consume 645 units for two months, they will only be charged for 45 units.

“For other categories, if the consumption is more than 600 fortnightly units – most bills are issued fortnightly – they will be charged the entire bill. Therefore, they are advised to make wise use of power to take advantage of advantage,” he added.

How will the AAP government pay for the program?

Party spokesman Malwinder Singh Kang said government revenues from excise and mining are expected to increase significantly in the coming months. With the end of “inspector raj”, even tax collection will increase, he added.

“Once the revenues grow, they will be passed on to the masses to fulfill each of the guarantees made by the AAP,” he said.

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