Additional security deposit in Odisha a regulatory requirement, not a discretionary levy: TP Discoms

THEBUSINESSBYTES BUREAU

BHUBANESWAR, DECEMBER 18, 2025

As public concern arose over the recent issuance of additional security deposit notices by Tata Power-led Discoms, TP Odisha Distribution Companies on Thursday clarified that the levy and adjustment of Security Deposit (SD) and Additional Security Deposit (ASD) on electricity bills is a statutory requirement under the Electricity Act, 2003, and strictly governed by the Odisha Electricity Regulatory Commission (OERC). The Discoms stressed that this is a long-standing regulatory practice followed across India, not a new initiative or discretionary measure. It is intended to ensure financial discipline, protect consumer interests, and maintain the overall stability of the electricity distribution sector.

Security Deposit is collected before the release of any new electricity connection and is reviewed annually. This review is linked to the consumer’s electricity consumption and applicable tariff rates. In cases where a consumer’s consumption decreases or tariffs are reduced, excess Security Deposit is adjusted in subsequent electricity bills. Conversely, if consumption increases or tariffs rise, consumers are required to pay an Additional Security Deposit to maintain the required security coverage in line with regulatory mandates. This system ensures that consumers neither overpay nor underpay relative to their actual usage.

TP Odisha Discoms highlighted that all Security Deposits and Additional Security Deposits are ring-fenced, maintained as Fixed Deposits with scheduled banks, and are not used for operational purposes. Consumers continue to earn interest on these deposits, which is credited annually to their electricity bills. In the financial year 2024-25 alone, interest amounting to Rs 217.29 crore at a rate of 6.50 per cent was credited to consumer bills across Odisha. Furthermore, Security Deposits, along with accrued interest, are fully refundable when a consumer surrenders or opts out of the electricity connection. For added flexibility, Discoms also offer prepaid electricity connections, which do not require any Security Deposit or Additional Security Deposit, giving consumers an alternative deposit-free option.

The practice of Security Deposit and ASD collection has been in place for several decades and was implemented even during the tenure of erstwhile utilities such as CESU, NESCO, SOUTHCO, and WESCO. The current framework aligns fully with the Electricity Act, 2003, and mirrors the practices followed by electricity distribution utilities across other states.

Consumers receiving ASD demand notices are required to make payments within the stipulated timeframe, failing which a surcharge of 15 per cent per annum is applicable on unpaid amounts.

, Gajanan Kale, Chief – Odisha Distribution Business, Tata Power, said, “Serving nearly one crore consumers, Tata Power’s distribution business follows robust regulatory mechanisms to ensure reliable power supply 24×7, 365 days a year. The annual Security Deposit review is a statutory exercise mandated by the regulator to protect consumer interests while ensuring business continuity. The Security Deposit earns 6.50 per cent 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.”

Under existing OERC regulations, Security Deposits are generally calculated as equivalent to two months’ electricity bills, based on the sanctioned load and past consumption. Following an annual reassessment, if the required Security Deposit exceeds the existing deposit by more than 10 per cent, the consumer is asked to pay the difference. Variations within 10 per cent are adjusted automatically in subsequent bills.

TP Odisha Discoms reiterated that the Security Deposit and ASD framework is an integral part of the regulatory system. It is designed to safeguard consumer funds, ensure transparent financial management, and maintain uninterrupted power supply across Odisha. Consumers are encouraged to view the process not as an arbitrary levy but as a secure, interest-earning, and fully refundable regulatory safeguard that upholds their interests while supporting the sustainable functioning of the state’s electricity distribution network.