Surge in power consumers amid free power scheme
Punjab's free electricity scheme has led to a surge in domestic connections, raising consumption and projected subsidy costs, risking PSPCL's financial stability.
Ever since the Aam Aadmi Party (AAP) introduced its free electricity scheme, offering 300 units per month at no cost, Punjab has seen a dramatic rise in the domestic power connections.
Punjab State Power Corporation Limited (PSPCL) had approved 5.5 lakh new domestic electricity connections between 2020 and 2022 before the launch of the free power scheme but the number rose to 6.27 lakh between 2022 and 2024, marking an increase of nearly 80,000.
PSPCL officials have largely attributed this spike to the bifurcation or trifurcation of meters sheerly due the “poor mechanism” of getting any new connection. At the time of the scheme’s launch, 63 lakh, out of 74.6 lakh consumers, were using less than 300 units of electricity per month. The number of domestic consumers with zero bills has since surged, climbing from 67.53% in August 2022 to 89% by the end of the 2022-23 financial year.
The trend is rampant in Punjab’s south zone, which includes Patiala, Sangrur, Ropar, Barnala and Mohali. In 2022-23 alone, over 95,000 new domestic connections were issued in the region. This increase continued into 2023-24 with another 71,770 new connections being recorded in the south zone.
The PSPCL data reveals that while the average annual rise in new connections used to be around 2.2 lakh, the introduction of the free electricity scheme saw 3.65 lakh new connections in 2022-23, followed by 2.63 lakh in 2023-24.
PSPCL officials estimate that nearly 1 lakh of these new connections are “split connections” — apparently created to take advantage of the 300-unit subsidy. When asked about the measures to curb the proliferation of multiple connections within a single household, a senior PSPCL official explained that there were no clear regulations to issue the new connection.
“If a household has a separate cooking arrangement, we have to issue a second connection,” the official stated. The surge in connections has led to a corresponding rise in electricity consumption across the state. The PSPCL data shows that domestic power usage reached 17,510 million units in 2022-23, up from before the scheme’s implementation.
Power subsidy to swell in future
The projected consumption for 2024-25 is 20,348 million units — a 17% increase over two years — is certain to inflate power subsidy. In 2021-22, the PSPCL’s domestic subsidy bill stood at ₹3,998 crore, but it is expected to reach ₹8,785 crore by 2024-25. With each passing year, the cost of the free electricity scheme has been increasing by around ₹500 crore. As of the current fiscal year, the total subsidy bill is set to touch ₹21,909 crore, with ₹10,175 crore allocated to agriculture, ₹8,785 crore for domestic consumers and ₹2,949 crore for industrial users.
Amid the rising power subsidy costs, the PSPCL has to remain heavily reliant on timely payments from the government, which funds 50% of its (PSPCL) budget. The corporation’s records show a pending subsidy bill of ₹2,492 crore owed by the state government. “The 300-unit free electricity scheme has pushed the PSPCL into financial peril. Sans reforms, the scheme is unlikely to be sustainable in the long term,” a senior PSPCL official warned.
Amidst growing concerns, power engineers have proposed that taxpayers and those employed in the state and Central government roles should be excluded from receiving electricity subsidies, to ease the financial burden on the PSPCL.