This news article is two part series. Part-I is published today.
Shakeel Qalander’s recent article in a Srinagar-based newspaper brought back memories of a period when electricity tariff determination in Jammu and Kashmir was undergoing a fundamental transformation.
Shakeel and I were contemporaries in the business community. He was then president of the Federation of Industries Kashmir, while I was president of the Kashmir Chamber of Commerce and Industry (KCCI). We represented different constituencies within the business community, but shared a common concern: Kashmir’s electricity problem could not be solved simply by asking consumers to pay more.
I remember those early years of the Jammu and Kashmir State Electricity Regulatory Commission particularly well. As KCCI president, I participated in the tariff process and attended the hearings.
The process was considerably more participatory than the public may realise today.
The Power Development Department would submit its tariff petition and Aggregate Revenue Requirement. Stakeholders could examine the proposals and submit objections. The department would respond, and stakeholders could reply. At the hearings, arguments and assumptions could be tested before the regulator.
KCCI took that responsibility seriously.
Our central argument was simple. A substantial part of the burden being placed on consumers resulted from inefficiencies and losses within the electricity system. Before increasing tariffs, the system itself had to become more efficient.
Nearly two decades later, that question remains remarkably relevant.
The immediate issue is the 6.83 per cent increase approved by the Joint Electricity Regulatory Commission, applicable from September 1, 2026.
The domestic tariff for consumption up to 200 units rises from ₹2.30 to ₹2.45 per unit, with further increases in higher slabs. Industrial consumers face an increase approaching 10 per cent.
Shakeel is right to ask whether consumers can reasonably be expected to absorb these increases.
But I would take the argument a step further.
Real Question
The real question is not simply: How high should the electricity tariff be?
We must also ask: How much of the electricity entering the distribution system actually reaches paying consumers? How much disappears through technical and commercial losses?
These are not abstract questions. They were at the heart of the tariff discussions in which KCCI participated nearly 20 years ago.
Our position was never that electricity should simply be free or that the utility should be denied the revenue required for financial viability.
Electricity has a cost. But the consumer should not automatically be made responsible for the cost of an inefficient system.
The historical figures explain why we took this position.
Government of India data based on Power Finance Corporation reports recorded Aggregate Technical and Commercial, or AT&C, losses of 69.05 per cent in J&K in 2008-09. They increased to 70.44 per cent in 2009-10 and 72.86 per cent in 2010-11.
During the same period, the three major Delhi distribution companies recorded losses broadly ranging from about 14 to 29 per cent.
An important qualification is necessary here. AT&C losses do not mean electricity theft alone. They include technical losses as well as commercial losses caused by problems with metering, billing and collection.
Nevertheless, losses approaching 70 per cent demonstrated that the fundamental problem was not simply the price at which electricity was purchased.
It was the efficiency of the distribution system.
This was why KCCI advocated two practical measures. The first was technological measurement.
We proposed modern monitoring technology, including the kind of Supervisory Control and Data Acquisition, or SCADA, system being used by Delhi's distribution companies.
The principle was straightforward: you cannot manage what you cannot measure.
If electricity entering a feeder, grid station or distribution transformer is accurately measured, and the electricity subsequently delivered to consumers is also measured, the utility can identify where discrepancies occur.
We need to enumerate whether it is a technical loss or there is an overloaded or defective transformer, or if there is an unmetered connection. Is billing inaccurate? Is electricity being stolen? Or is collection failing?
Without measurement, all these problems disappear into one enormous statewide figure called “losses.”
Interestingly, what stakeholders were proposing then has since become accepted power-sector practice.
The Government of India now explicitly recognises smart metering at consumer, distribution-transformer and feeder levels as a critical intervention. Energy accounting at these levels is used to identify high-loss and theft-prone areas.
In other words, the principle behind what KCCI argued nearly two decades ago is now part of mainstream electricity-sector reform.
Make System Accountable
Our second proposal was even more basic.
Every mohalla distribution substation should be accountable for the electricity it receives and distributes.
Suppose a substation receives 10,000 units. The utility should know precisely how many of those units are subsequently billed to consumers connected to that substation.
The difference should not disappear into an anonymous statewide loss figure.
Every substation should have an identifiable loss profile. Its performance should be monitored. Its employees and management should know the target. Where losses are excessive, the utility should know precisely where to intervene.
This is essentially the principle of distribution-transformer-level accountability.
Government policy has subsequently moved in this direction as well. Energy accounting at feeder and transformer levels is now recognised as a mechanism for identifying high-loss areas and improving billing and collection efficiency.
This changes the philosophy of tariff determination.
Instead of saying, “The utility has a revenue gap; therefore, the consumer must pay more,” the regulator should first ask why the revenue gap exists.
How much results from unavoidable and legitimate costs?
And how much arises from costs that an efficiently managed distribution system should not incur?
There has undoubtedly been progress. J&K is not where it was 20 years ago.
Billing and collection have improved substantially. The official Kashmir Power Distribution Corporation Limited energy audit for financial year 2024-25 records annual AT&C losses of 33.65 per cent.
That is a dramatic improvement from losses of around 70 per cent.
But 33.65 per cent is still an enormous figure.
The Indian AT&C loss average was 15.04 per cent in 2024-25, according to the Ministry of Power. The national objective under the Revamped Distribution Sector Scheme is to bring losses down to 12 to 15 per cent.
The obvious question for the regulator is therefore this:
Why should consumers in Kashmir be asked to pay a higher tariff while the distribution system continues to carry losses more than twice the Indian average?
The answer cannot simply be that the utility needs more revenue.
The utility certainly requires financial sustainability. But financial sustainability requires efficiency as well as revenue. Indeed, the Ministry of Power itself links power-sector reform to financial sustainability and operational efficiency.
Before demanding more from consumers, therefore, the system must demonstrate that it has done everything reasonably possible to reduce avoidable costs.
From Tariffs to Accountability
Perhaps this is where Kashmir’s electricity debate needs to mature. For too long, the issue has been framed as government versus consumer. The government says the utility needs more money.
Consumers say they cannot afford higher bills. The regulator calculates a tariff. The real debate must examine the entire electricity value chain: Generation. Transmission. Distribution. Losses. Billing. Collection. Tariff.
Every stage should be transparent. Every stage should be accountable. And every stage should be examined from the perspective of the economic interests of the people of Jammu and Kashmir.
Looking back at those early tariff hearings, I do not claim that KCCI had all the answers.
But we had identified a fundamental problem. Before repeatedly asking consumers to pay more, the system had to know where its losses were occurring.
We proposed technological monitoring and local accountability at the mohalla-substation level.
And we wanted the regulator to determine whether the costs being placed before it were genuinely unavoidable.
Today, the terminology has changed. We speak of smart meters, feeder-level energy accounting, distribution-transformer monitoring, SCADA, automated billing and performance-linked reform.
But the principle remains the same:
Shakeel Qalander ends his article with a question that deserves attention: before asking an honest consumer to pay more, have the utilities and regulator exhausted every possibility of making the system cost less, lose less and collect better?
Nearly 20 years after our arguments before the regulator, that question still demands an answer.
Once we have asked where electricity is being lost and who should pay for those losses, we must confront an even bigger question. Kashmir is not merely a consumer of electricity. Its rivers produce it. That changes the economics of the debate entirely.
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