Supreme Court Flags Political Manipulation of Electricity Tariffs

Court Says Election-Season Price Holds Leave Citizens Paying More Later

August 10, 2025

The Supreme Court has called out a troubling pattern in how electricity is being managed in the country. The Electricity Regulatory Commissions (ERCs), which are supposed to keep power tariffs fair and free from political games, are allowing power companies to pile up “regulatory assets,” a term for unpaid bills from earlier electricity costs, which are pushed into the future for recovery. These postponed costs have gone far beyond what the law allows, with long-term consequences for ordinary citizens.

Electricity, which is an everyday necessity for citizens, is being used as a tool in political strategies, and eventually the public has to pick up the tab. Before elections, governments often do not want electricity prices to go up because that could upset voters. They quietly get regulators to hold off on raising tariffs. Instead, the gap between what power companies earn and what they spend is written down as a regulatory asset, which is just a postponed bill. This way, people keep paying the same rates for a while, and the ruling party can claim it has kept prices low. Later, the postponed costs are added back into bills, often with extra charges, and people end up paying much more.

Electricity touches every home and business, and it is especially tempting for politicians to use it for quick wins. The Electricity Act of 2003 was supposed to protect against that. Under this law, ERCs have the authority to decide tariffs, encourage healthy competition in the market and ensure people across the country get a steady supply of power. Their job is to act in the public interest and keep the power system both stable and transparent.

The Court found that ERCs have allowed new regulatory assets to be added while the old ones remain unpaid, as reported by The Hindu. The Court also pointed out that the way ERC members are chosen has made it harder for them to operate independently, and that true autonomy requires regulators to actively resist pressure.

To fix the problem, the Court has laid down some strict rules. Regulatory assets must stay within the limits set out in the Electricity Rules. Any that already exist must be paid off within seven years from April 1, 2024. Any created after that date must be cleared within three years. ERCs have also been told to prepare clear repayment plans and to investigate why some power companies have allowed these amounts to remain unpaid for so long.

Power companies that operate without recovering their full costs for years struggle to maintain their equipment or invest in upgrades. This can lead to more frequent breakdowns, slower repairs and a less reliable supply of power.

The Supreme Court’s observations should serve as a warning about how political influence can creep into systems that are supposed to function independently. Independent regulators exist so that decisions about essential services are made on the basis of law, expertise and public need. If political leaders can sway these bodies for short-term advantage, the very idea of having neutral decision-makers collapses. Once that happens, every decision risks being timed or shaped for electoral benefit, regardless of the long-term costs to the public.

The same playbook has appeared in other sectors. In the food supply chain, price control boards have sometimes delayed increasing the procurement price for farmers or the retail price for consumers until after an election, causing sudden spikes later. In urban development, housing regulators have held back on approving infrastructure projects in opposition-controlled areas while rushing clearances in politically aligned districts. In environmental regulation, projects with political backing have been cleared despite serious ecological concerns, while others have been stalled for years without clear explanation. Each case shows how bending independent systems to political needs can damage public trust and lead to uneven, unreliable services.

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