CHENNAI: Southern states, including Tamil Nadu, have raised concerns over the proposed discontinuation of the existing power allocation mechanism from Central Generating Stations, as the Ministry of Power is moving towards a market-driven procurement framework.
According to the minutes of the 54th Technical Coordination Committee and 57th Southern Regional Power Committee meetings held on March 16 and 17 and released on April 20, Tamil Nadu Power Distribution Corporation Limited noted that the draft proposal on discontinuing allocation of power from central generating stations from April 1, 2026, could have far-reaching implications for states’ ability to meet power demand and manage costs.
It argued that any such change should be implemented only prospectively and limited to projects approved after that date. TNPDCL called for “grandfathering” of all existing and pipeline projects, including those under construction, with financial closure or concluded power purchase agreements. It also stressed the need to safeguard home State entitlements and beneficiary shares where investments and planning have already been undertaken.
Tamil Nadu Power Distribution Corporation Limited noted that the draft proposal on discontinuing allocation of power from central generating stations from April 1, 2026, could have far-reaching implications for states’ ability to meet power demand and manage costs
Raising regulatory concerns, TNPDCL said that if allocation was discontinued, central generating stations must be brought under competitive bidding in line with tariff policy provisions. It also sought clarity on how such projects would be treated within the proposed framework.
The utility pointed to ambiguity surrounding nuclear projects, including the Kudankulam Nuclear Power Plant expansion units, and urged explicit exclusion of such projects from the proposed mechanism.
Officials from NTPC Limited informed the forum that the draft policy was at an advanced stage, with stakeholder consultations initiated following advice from the Central Electricity Authority.
The Member Secretary of the Southern Regional Power Committee noted that several States, including Tamil Nadu and Telangana, were yet to submit their views despite multiple reminders.
Echoing similar concerns, the Transmission Corporation of Telangana supported continuation of the existing allocation mechanism for ongoing projects and cautioned against discontinuing bundled power arrangements. Andhra Pradesh Power Transmission Corporation highlighted regulatory challenges in accepting costly unallocated power and proposed a one-time right of refusal mechanism for States.
Officials clarified that unallocated power is distributed on a pooled basis and states cannot selectively accept cheaper power. They must either accept the entire allocation or surrender it, failing which the burden of high-cost power could shift to other beneficiaries.
The Central Electricity Authority said the pooling mechanism ensures cost averaging and equitable distribution among States. The committee recommended that all states and entities submit detailed comments to the Ministry within one to two days so that their concerns can be reflected in the final policy.