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State Overview: Telangana

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Telangana state was carved out of Andhra Pradesh in 2014. This note briefly captures the development of the sector, with special focus on distribution, from 2015 to 2019. It provides a brief sector overview and covers trends in power purchase, electricity demand, quality of supply and distribution company finances, and major developments in regulatory oversight.

From a situation of power shortage, the sector has moved to a small surplus. There has been significant increase in centralised solar capacity and there are plans to add state owned coal power capacity. The capacity addition plans were largely driven by the Energy Task force report of 2014 and Power For All agreement of 2015. Both these projected ambitions sector growth, but the actual demand growth and state-owned capacity addition have been much less. Ambitious growth projections are unfortunately again seen in the recent multi-year tariff proposals.

Demand growth has been significant in domestic, low tension agriculture and high-tension agriculture, but moderate in industrial and commercial sectors. With very high agriculture consumption, state subsidy is high, especially in the Northern distribution company.

There has been improvement in the quality of supply and service, especially in urban and semi-urban areas. 24 x 7 power supply to agriculture was announced in 2018, and is projected as a unique achievement of Telangana, though there are questions on actual quality of supply and availability of water.

Tariff revisions have been delayed and low, while the costs have been steadily increasing. True-ups also have been irregular and recovery of additional expenses delayed. Due to all these, financial losses of the distribution companies have been increasing over the years.

State Electricity Regulatory Commission was set up with full strength after state formation. But with retirement of members one after another and finally the chairman, there have been long periods of vacancy. With limited staff, vacancies and limited pro-active efforts, regulatory oversight on the sector has been low. The full overview can be read here.