The Telangana Electricity Regulatory Commission (TGERC) has proposed removing the cap on the recovery of fuel cost adjustment (FCA) charges of  ₹0.3 (~$0.003)/kWh.

The proposed amendment allows FCA charges above ₹0.3(~$0.003)/kWh to be adjusted during the process of pass-through of gains and losses on account of variations in the annual revenue requirement (ARR) for the year.

Under the draft Telangana Electricity Regulatory Commission (Multi-Year Tariff) First Amendment Regulation, 2026, distribution companies (DISCOMs) may recover or pass on FCA charges to consumers.

LT-V power category agricultural consumers will be exempt from pass-on of FCA charges, and the DISCOMs will recover the FCA charges of LT-V agricultural consumers from the Telangana government.

The DISCOMs will determine FCA charges recoverable from consumers based on the formula as given below:

FCAEHT = (PPCact – PPCapp)/(1-LEHT) for EHT consumers;

FCA33 kV = (PPCact – PPCapp)/(1-L33 kV) for 33 kV consumers;

FCA11 kV = (PPCact – PPCapp)/(1-L11 kV) for 11 kV consumers;

FCALT = (PPCact – PPCapp)/(1-LLT) for Low Tension consumers;

Where,

FCAEHT = FCA to be levied on consumers availing power supply at a voltage level of 132 kV and above;

FCA33 kV = FCA to be levied on consumers availing power supply at a voltage level of 33 kV;

FCA11 kV = FCA to be levied on consumers availing power supply at a voltage level of 11 kV;

FCALT = FCA to be levied on consumers availing power supply at low tension (230 volt at single phase and 415 Volt (3-Phase);

PPCact = Actual average power purchase cost, including actual inter-State transmission charges for the month, and is worked out by using the formula:

(TPPCact in ₹million )/(TPPUact in MU);

Where,

TPPCact = Actual total power purchase cost (with actual fixed cost) from approved sources, including actual interstate transmission charges corresponding to TPPUact;

TPPUact = Actual total power purchase units (TPPUact) will be arrived at by grossing up the approved distribution and transmission losses on the actual metered sales, plus agriculture sales (either approved agriculture sales or assessed agriculture sales, whichever is less);

PPCapp = Approved average power purchase cost, including interstate transmission charges for the month as per tariff order;

LEHT = Transmission losses percentage at the 132 kV level and above as approved in relevant tariff orders;

L33 kV = Transmission and distribution (T&D) losses percentage up to 33 kV level, as approved in the relevant tariff orders;

L11 kV = T&D losses percentage up to the 11 kV level as approved in relevant tariff orders;

LLT = T&D losses percentage up to the LT level, as approved in relevant tariff orders

To arrive at the actual power purchase cost, the fixed cost paid to each generating station will be considered.

The amendment has been proposed to allow FCA charges beyond 45 days only at the time of pass-through of gains and losses arising from variations in uncontrollable items of the ARR for the year.

The draft says FCA charges must be published within 45 days of the end of the relevant month.

It also instructs the DISCOMs to file a true-up petition after completing their audited annual accounts. The petition must seek approval for passing through gains and losses arising from variations in uncontrollable items in the ARR for the year.

They must also submit details of FCA charges already passed on to consumers, along with detailed computations and supporting documents, covering the following:

• FCA charges passed on to consumers up to ₹0.3(~$0.003)/kWh, whether positive or negative
• FCA charges to be passed on to consumers over and above ₹0.3(~$0.003)/kWh, whether positive or negative
• FCA charges not passed on to consumers, whether positive or negative

The charges applicable for the Nth month must be displayed by the 15th of the N+2 month, levied on units consumed during the N+2 month, and included in bills issued in the N+3 month.

The Commission said that during the hearings on the ARR petitions, Telangana DISCOMs and other stakeholders contended that the principal regulations governing FCA charges were leading to operational challenges, financial stress, and difficulties in recovering legitimate costs.

The regulator added that stakeholders said that restrictions on allowing FCA claims beyond the prescribed timelines were resulting in substantial unrecovered fuel cost variations, thereby impacting the financial viability of the DISCOMs. It added that these restrictions also prevented the appropriate consideration of actual fuel cost variations during the tariff true-up.

Under the proposed revision to the regulations, the state government may, on a case-by-case basis, exempt specific important projects or works that need to be carried out urgently following the tariff-based competitive bidding process. When submitting investment proposals to the Commission, the transmission licensee must include a copy of the exemption granted by the state government.

In March 2026, TGERC increased the power transmission tariffs, wheeling charges, and the State Load Despatch Center charges for FY 2026–27. The Commission increased the transmission tariff to ₹90.90 (~$0.9608)/kW/month for long- and medium-term users for FY 2027, from ₹68.64 (~$0.7255)/kW/month in the previous year.

It also issued the Draft Telangana Electricity Regulatory Commission (Framework for Resource Adequacy) Regulations, 2025, outlining a comprehensive 10-year framework for demand forecasting, generation planning, and procurement.

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