The Bhutanese Leading the way.
The Prime Minister, Dasho Tshering Tobgay, said that the government has asked the Electricity Regulatory Authority (ERA) to relook at its domestic power tariff proposal, keeping affordability in mind.
Lyonchhen said that the cost of building future projects cannot be billed to consumers right now, as future projects should be built from profits instead.
The ERA, in March 2026, had approved a tariff of Nu 5.63 per unit for Low Voltage (LV) users, which are the majority of small users in the country, such as households, businesses, offices, restaurants, etc.
The current LV tariff is Nu 1.28 for the first 100 units (free for rural areas and 200 units free for highlands) and Nu 2.66 per unit for anything above 100 units.
The High Voltage (HV) tariff, which is for big industries that consume 88% of the power, is currently Nu 2.66 per unit, and this was approved by ERA to be hiked to Nu 2.88 per unit.
Medium Voltage (MV) tariff, which is for medium and small-scale industries that consume 2% of the power, has been increased from the current Nu 2.66 to Nu 4.78 per unit.
It has been understood that the Prime Minister conveyed his views to the Ministry of Energy and Natural Resources (MoENR), which in turn returned the ERA report to the ERA with new instructions.
The instructions being that ERA has been asked to relook at the tariff, keeping affordability in mind, and also come up with various subsidy options and calculations.
A source said there is concern, especially now with the energy crisis (due to the Iran War).
The source said that the ERA has to follow the larger government policy within the provisions of the National Energy Policy. The ERA has its own Tariff Determination Regulations drawn from this policy.
The source said the ERA is the right body to calculate the various subsidy options, as only it has all the technical information and calculations that the government needs to make the final decision on subsidies.
Meanwhile, MV units have filed a petition to the MoENR on the high increase in their tariff rates.
The ERA has asked for some more data from Bhutan Power Corporation (BPC) and is looking at consumption patterns and the various tariff blocks.
While the Cabinet is not directly involved in setting the tariffs, the government takes the final call on the subsidies to be given, which shapes the final tariff.
Another source said the Prime Minister became aware of the impact of the ERA tariff, as the subsidies would have to come from the government budget, because a substantial tariff increase also has major budgetary implications.
For example, the current Nu 2.66 tariff for LV is after heavy subsidisation from the government, as the actual LV tariff approved by ERA in 2022 was Nu 4.85, which means the government is already paying around 45 percent of the tariff, or Nu 2.19 per unit, as subsidy for LV.
The subsidy comes from the 13 percent Royalty Power that each hydropower station is supposed to give free to the government. This is sold by DGPC at commercial rates, and the money is handed over to the government. The current Royalty Power is worth around Nu 2.5 billion (bn) to Nu 3 bn a year, but will go up to Nu 4 bn plus once P II is also included.
The ERA-approved Nu 5.63 LV tariff is divided into the generation tariff at Nu 2.37 per unit, which is DGPC’s cost of generating the tariff, and Nu 3.26 as the network cost of BPC to distribute and supply that power, maintain the existing infrastructure, and build new ones.
The HV tariff does not have any subsidy, as their distribution cost is low for the 88% of the power they consume, which is in just a few locations such as industrial areas like Pasakha, Norbugang, etc.
As of 31 December 2024, BPC has 255,517 customers in total, of which the sheer majority, at 255,421, are LV or household consumers, who, despite their numbers, only consume 10 percent of the total domestic power.
There are 23 HV consumers who take 2 MW and above, who consume the bulk of the local energy at 88 percent, and 73 MV consumers who are below 2 MW and at 300 KV or above, and consume 2 percent of the power.
