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Explained: The cost and benefit of AAP’s free electricity scheme in Punjab

AAP's free electricity scheme in Punjab: How does it work? How many consumers will it benefit? What is the burden it will place on the Punjab State Power Corporation Limited?

Punjab Chief Minister Bhagwant Mann and Delhi Chief Minister Arvind Kejriwal wave at supporters during a roadshow in Mandi. (PTI Photo/File)

On completion of its first month in power, the AAP government in Punjab on Saturday (April 16) announced 300 units of free electricity for consumers across the state from July 1. This was one of the key promises the party had made ahead of the Assembly elections.

What is this scheme? How many consumers will it benefit? What is the burden it will place on the Punjab State Power Corporation Limited (PSPCL)? The Indian Express explains.

What is the AAP’s new electricity scheme in Punjab?

The party’s national convenor and Delhi Chief Minister Arvind Kejriwal had announced a new electricity scheme for the state on June 29, 2021, ahead of the Assembly elections. He had said that if the AAP was voted to power in Punjab, the government would give every household in the state free electricity up to 300 units.

He had even stated that if AAP forms the government, the power bill waiver promise will be met immediately.

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The electricity scheme is likely to be similar to the one implemented in Delhi by the AAP government.

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

There are 73.80 lakh households which are provided electricity via the PSPCL, according to its data.

As per the pattern of power consumption in past billing cycles, nearly 62.25 lakh consume less than 300 units per month. This means, nearly 84 per cent will be directly benefited by this scheme, revealed a PSPCL official while speaking to The Indian Express.


Hence, 84 per cent of PSPCL consumers are likely to pay nothing if fixed charges are also waived off.

As demand varies according to season, what is the average power consumption?

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

Therefore, consumers in the under 300 units per month bracket increase in winters and slightly decrease in summer. Taking this into account, the average number of households which consume up to 300 units is 62.25 lakh. The remaining 11.55 lakh consume more than 300 units per month.


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

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

The average consumption was 137 units per month in the category of up to 300 units, as per the PSPCL’s historical data.

What are the existing annual power subsidies for consumers?

At present, domestic consumers get a subsidy of Rs 3,998 crore per annum.

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


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

The previous Charanjit Singh Channi government had slashed power bills by Rs 3 per unit in various slabs for these consumers from November 1, 2021, and the AAP government had carried forward this subsidy.


What impact will the new electricity scheme have?

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

What do PSPCL officials think of Punjab’s new electricity scheme?

According to PSPCL officials, it is likely that consumers who had been using 150 units per month, will now consume up to 300 units because it is free. Also, joint families may get their metres split to benefit from this scheme. In addition, many others consuming a little above 300 units per month may reduce their consumption to fall in this bracket.


So, could the subsidy outlay for the Punjab govt increase then?

Yes. According to PSPCL’s calculations, if all consumers use the entire 300 units of free power at a rate of Rs 5.11 per unit, the total subsidy outlay would increase to Rs 11,452 crore per annum, in addition to fixed charges of Rs 459 core. As such, the total would amount to Rs 11,911 crore each year.

For the approximate 11.55 lakh consumers who use more than 300 units of power, the yearly subsidy outlay amounts to Rs 2,427 crore, including fixed charges of Rs 302 crore.

So, the estimated annual subsidy outlay for both the categories (about 73.80 lakh consumers) would increase to Rs 14,337 crore.

Chief Minister Bhagwant Mann in a video released Saturday afternoon, stated, “Now, SC/BC/BPL and freedom fighters’ families will get the first 300 units per month free, instead of the first 200. Hence, these consumers will be charged only for the additional units, i.e, if they consume 645 units for two months, they will be billed only for 45 units.

“For the other categories, if consumption is more than 600 units bimonthly — most bills are issued bimonthly — they will be charged the full bill. Hence, they are advised to make judicious use of power to avail the benefit,” he added.

How will the AAP government pay for the scheme?

The party’s spokesperson Malwinder Singh Kang said the government’s income from excise and mining is likely to increase considerably in the coming months. With the end of ‘inspector raj’, even tax collection will increase, he added.

“Once the income increases, this will be passed on to the masses to fulfill each and every guarantee made by the AAP,” he said.

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First published on: 16-04-2022 at 10:49 IST
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