Tata Power Odisha Discoms Defend Additional Security Deposit as Statutory Mandate Under Electricity Act

Bhubaneswar, December 18, 2025 – In a bid to address growing consumer concerns over additional charges on electricity bills, Tata Power’s Odisha Distribution Companies (Discoms) have emphasised that the levy of Additional Security Deposit (ASD) is a long-standing regulatory requirement under the Electricity Act, 2003, and fully compliant with Odisha Electricity Regulatory Commission (OERC) guidelines.

The clarification comes amid rising queries from consumers regarding the ASD, which adjusts security deposits based on changes in electricity tariffs and consumption patterns from the previous financial year.

According to the Discoms, this process ensures that security coverage remains adequate, safeguarding both consumer interests and the financial stability of the power distribution sector.

“Security Deposit (SD) adjustment and ASD is linked to consumers’ consumption patterns and applicable tariff charges in the state,” the Discoms stated in an official release.

For customers whose electricity usage decreased in the last financial year, excess deposits are adjusted as credits in their bills. Conversely, those with increased consumption must provide additional funds to maintain the required coverage.

The practice, described as a “statutory and regulatory process mandated by OERC,” has been in place for decades and is uniformly followed by distribution utilities across India. It predates the current operations of Tata Power in Odisha, having been implemented by predecessor entities such as CESU, NESCO, SOUTHCO, and WESCO.

A key highlight is the consumer-friendly aspect of these deposits: they are ring-fenced, invested in interest-earning fixed deposits with scheduled banks, and fully protected from misuse. In the financial year 2024-25, consumers across the state received Rs 217.29 crore in interest credits on their security deposits, calculated at a 6.50% annual rate and reflected directly in their electricity bills.

“Consumers continue to earn interest on their Security Deposits every year, with the interest amount credited to their electricity bills annually, in line with regulatory provisions,” the release noted. Upon surrendering a connection, the full principal plus accrued interest is refunded.

To further accommodate preferences, the Discoms offer prepaid electricity connections that bypass the need for any security deposits entirely.

The framework is designed not as a punitive measure but as a tool for financial discipline. Failure to pay the notified ASD within the stipulated timeframe, however, incurs a 15% per annum surcharge, as per statutory rules.

Mr Gajanan Kale, Chief of Odisha Distribution Business at Tata Power, underscored the regulatory intent behind the annual review. “Serving nearly 1 crore consumers, with a growing customer base, Tata Power’s distribution business follows robust regulatory mechanisms to ensure a reliable power supply 24×7, 365 days, in line with state and central guidelines,” Kale said. “The annual Security Deposit review is a statutory exercise mandated by the regulator, designed to protect consumer interests while ensuring business continuity.

The Security Deposit earns 6.50% annual interest, which is adjusted in electricity bills during the first quarter, and any excess amount arising from lower consumption is also adjusted. These deposits are maintained as Fixed Deposits and are not used for operational purposes.”

Tata Power, which manages distribution in central, northern, southern, and western Odisha, has urged affected consumers to promptly settle ASD notifications to avoid surcharges.

The company reiterated its commitment to transparency, noting that the process aligns with national standards and promotes sector stability.

As Odisha’s power demand continues to grow, such regulatory mechanisms play a crucial role in balancing affordability with reliability. For more details on ASD calculations or prepaid options, consumers can visit the Discoms’ official portals or contact customer care services.