The Bhutanese Leading the way.
The Royal Government has directed the Electricity Regulatory Authority (ERA) to review and reassess the underlying cost structures and assumptions behind proposed domestic electricity tariff revisions before any final rate adjustments are approved.
The decision follows growing concerns regarding the potential economic impact of tariff hikes on domestic consumers, local industries, and the broader macroeconomy. Consequently, electricity prices across the country are currently being applied on an interim basis under a temporary extension of the 2022/23–2024/25 tariff cycle to ensure billing continuity.
Addressing the public during the 32nd Meet-the-Press session, Lyonpo Sonam Tashi, Minister of the Ministry of Energy and Natural Resources (MoENR), clarified that while tariff determination remains an independent regulatory function under the Electricity Act 2001, the government must balance sector viability with economic stability.
“The revised electricity rates have not yet been finalized,” Lyonpo Sonam Tashi stated, emphasizing that the government requested a broader review after reviewing the initial proposals submitted by the Bhutan Power Corporation (BPC) and Druk Green Power Corporation (DGPC) in December 2025. “The government recognizes electricity as an essential service and is mindful of the impact that tariff changes can have on households, businesses, and the wider economy.”
To cushion low-voltage (LV) consumers, primarily residential households and small businesses from immediate shocks once the new rates take effect, the government has set aside a targeted budgetary provision of approximately Nu 400 million for the current financial year.
“This is a budgetary provision,” the Lyonpo noted, explaining that actual disbursements will depend on the final structure determined by the ERA. “The government’s approach is to ensure that any support is targeted, fiscally responsible, and sustainable, rather than maintaining electricity prices artificially low over the long term.”
Balancing affordability with a 25 GW clean energy vision
The regulatory pause comes at a pivotal moment for Bhutan’s energy transition and long-term economic strategy. As the nation targets a tenfold expansion of its economy (10X economy) and accelerates transport electrification, national power demand is projected to surge significantly.
Meeting this demand while maintaining energy security requires major capital investments in power generation, grid infrastructure, and alternative renewables like solar to offset winter hydrological deficits. Central to this plan is Bhutan’s national ambition to harness 25 GW of renewable energy capacity by 2040.
However, sector officials point out that achieving these goals is impossible without financial sustainability across utilities. Increasing generation, transmission, power purchase costs, and import requirements during lean seasonal periods mean tariff structures must reflect the true cost of supply.
“The objective of the tariff review is consequently not simply to increase electricity prices, but to establish a tariff structure that appropriately reflects the cost of supplying electricity while remaining affordable and supporting economic growth,” Lyonpo Sonam Tashi emphasized.
He added that assessing the future impact of tariffs cannot be reduced to a single per-unit price, as new models will evaluate various elements, including energy and demand charges, tailored across High Voltage (HV), Medium Voltage (MV), and Low Voltage (LV) consumer categories.
The ERA is expected to announce the finalized tariff schedule once its multi-sectoral cost evaluation is complete.
