Relief for UP Power Consumers: Security Deposits to Earn 6.5% Interest

As electricity bills climb due to fuel surcharges, 3.73 crore consumers in Uttar Pradesh will see a direct credit adjustment for interest accrued on their security deposits.

For millions of households across Uttar Pradesh, the recent arrival of electricity bills has been a source of frustration, largely driven by the 10% fuel surcharge imposed in June. However, a regulatory mechanism is finally offering some reprieve. Power distribution companies have begun the process of crediting interest on the security deposits held by consumers, providing a collective benefit of approximately ₹300 crore.

The Mechanics of the Payout

This development isn't a gesture of goodwill, but a mandate rooted in law. Under Section 47 of the Electricity Act, 2003, and Section 4.20 of the Electricity Distribution Code, 2005, consumers have a statutory right to earn interest on their deposits at the prevailing bank rate as of April 1. With the bank interest rate set at 6.50% on April 1, 2025, distribution companies are now adjusting this ब्याज directly into the billing software.

According to the latest data, the average security deposit held by power consumers across the state for the 2025-26 fiscal year stood at nearly ₹4,616 crore. The primary source of this update confirms that the adjustment is being reflected in the June billing cycle. For those whose bills have already been processed or where the adjustment couldn't be accommodated this month, the credit will be applied to the July bills.

A Watchdog’s Advice

While the original article on this policy provides the framework, the practical execution rests with the billing software of various distribution companies. Avdhesh Kumar Verma, President of the State Electricity Consumer Council, has urged the public to keep a close watch. He suggests that consumers cross-verify their recent statements to ensure the credit has been applied correctly. If the interest benefit is missing, consumers are encouraged to flag the discrepancy with their local distribution office to ensure they receive their due.

Why It Matters

This move represents a rare instance where regulatory compliance acts as a buffer against inflationary pressures on utility costs. While a 6.50% return on security deposits might seem modest for an individual household, the aggregate impact—a ₹300 crore infusion back to the consumer base—is significant. It highlights the importance of holding utilities accountable to the Electricity Act, which is designed to protect consumer capital.

Beyond the immediate financial relief, this serves as a reminder that state-mandated interest payments are not optional. In an era where fuel surcharges often dominate the conversation, this adjustment brings the focus back to the fundamental rights of the consumer. It remains to be seen how efficiently the state’s billing software handles this large-scale automated transfer, but the highlights of this policy offer a much-needed cooling effect during a period of high power demand and rising operational costs for companies.