October 2, 2025

Hold on, power lovers! The Central Electricity Regulatory Commission (CERC) has called a loud and clear public hearing. The buzz? The GST rate on coal shot up from 5% to a whopping 18% on September 22! Along with that, the government scrapped the hefty ₹400 per tonne compensation cess on coal. This big change is shaking up the electricity world where Gencos (power generators) and Discoms (power distributors) battle to keep power flowing and bills fair. Why the fuss? Because power purchase agreements (PPAs) have special rules for "Change in Law" events to adjust tariffs accordingly. CERC’s suo motu order says it’s mandatory to figure out how these GST changes impact coal costs. Since coal is the heart and soul of India’s power – roughly 70% of electricity comes from coal-based plants! – any cost shift here can ripple through your power bills. The regulator is no joke here. It noted, "The abolition of the Compensation cess and the increase in the GST rate on coal have a necessary impact on the cost of coal to be procured by the Gencos." So, it’s bringing everyone together—Discoms, Gencos, and others—to share their views and settle on a consistent way to handle this tax roller coaster. This means uniform directions on the change in law events, no matter which company or contract is involved. Experts also jumped into the ring. Ratings agency ICRA explained that the removal of the compensation cess despite a rise in GST may actually cut power generation costs by around 15 paise per unit for coal-based plants. Since coal power makes up the majority of the grid, this could lower costs for Discoms by about 12 paise per unit—some relief to your monthly bills! Even Crisil Intelligence chimed in: certain types of thermal coal (like G11 grade used widely) might see prices fall from ₹3,140-3,150 per tonne down to ₹2,895-2,905 per tonne thanks to the cess removal. That’s good news for power producers and, hopefully, consumers too. CERC has asked all stakeholders to file their written thoughts within 10 days. This public hearing is their move to keep India’s power sector steady and fair while the GST storm brews. So next time you get your electricity bill, remember the drama of GST, coal prices, and the watchdog regulator working behind the scenes!

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Tags: Cerc, Gst rate, Coal price, Discoms, Gencos, Power tariff,