The Tamil Nadu Electricity Regulatory Commission (TNERC) has approved a provisional additional tariff subsidy of ₹15.45 billion (~$161.3 million) for FY 2026-27 to compensate Tamil Nadu Power Distribution Corporation (TNPDCL) for revenue loss from the state government’s decision to increase free electricity for domestic consumers.

The subsidy applies to domestic consumers who consume up to 500 units in a bimonthly billing cycle. These consumers will receive 200 units of free electricity bimonthly, effective May 10, 2026.

Domestic consumers who consume more than 500 units bimonthly will continue under the existing tariff structure, including the existing 100 units of free electricity.

TNPDCL informed the Commission that the state government had allotted ₹17.30 billion (~$180.6 million) annually as an additional tariff subsidy. Since the policy came into effect on May 10, 2026, the provisional subsidy for FY 2026-27 has been calculated for 326 days, from May 10, 2026, to March 31, 2027.

The Commission approved ₹15.45 billion (~$161.3 million) as a provisional subsidy for the period.

The subsidy is linked to the additional free electricity provided in the 101 to 200 unit consumption slab. The first 100 units were already covered under the earlier tariff subsidy order.

For consumers with bimonthly consumption above 100 units and up to 200 units, the subsidy for the 101 to 200 unit slab has been estimated at ₹4.39 billion (~$45.8 million) for 326 days.

For consumers with bimonthly consumption above 200 units and up to 500 units, the subsidy for the 101 to 200 unit slab has been estimated at ₹11.06 billion (~$115.5 million) for 326 days.

The subsidy will be released in four tranches. The government must release ₹2.46 billion (~$25.7 million) immediately for the period from May 10, 2026, to June 30, 2026. It must release ₹4.36 billion (~$45.5 million) by June 30, 2026, for the second quarter, and ₹4.36 billion (~$45.5 million) by September 30, 2026, for the third quarter.

The final tranche of ₹4.27 billion (~$44.6 million), covering January 1, 2027, to March 31, 2027, must be released by December 31, 2026.

TNERC said the approved subsidy is provisional and will be reconciled later based on actual consumption data submitted by TNPDCL. The distribution company must submit a reconciliation report to the Commission.

In February, the Supreme Court had rapped Tamil Nadu over its promise of subsidized electricity, questioning how the state could guarantee free or subsidized power while its distribution company continues to incur heavy financial losses. Hearing TNPDCL’s challenge to Rule 23 of the Electricity (Amendment) Rules, 2024, which mandates cost-reflective tariffs, the Court warned that absorbing DISCOM losses through subsidies could strain public finances and affect economic growth.

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