Where Does Your Electricity Bill Go? Transmission and Distribution Costs Explained

The L&T Transmission Orders in Two Sentences

Larsen & Toubro's Power Transmission & Distribution business won multiple ‘mega’ orders across Saudi Arabia, the UAE and India, as reported by ETEnergyWorld on 5 October 2026; L&T uses ‘mega’ for orders worth ₹10,000–15,000 crore, given as one range for the set. The orders cover 380 kV transmission and substation work in Saudi Arabia, 132/11 kV substations in the UAE, and a transmission system of lines and substations in Visakhapatnam for a private sector developer.

These orders do not change any consumer's electricity bill. They are construction contracts awarded to a builder, two of the three are outside India, and no tariff order is linked to them. They are a useful prompt for a different question: how the grid is paid for.

Takeaway: a transmission order is a building contract, not a tariff change.

What Are Transmission and Distribution?

Transmission and distribution are the two stages that move electricity from a power plant to a meter. The two stages differ in voltage, distance and owner.

Transmission

Transmission carries bulk power over long distances at high voltage. The 380 kV lines in the Saudi Arabia order are transmission assets.

Substation

A substation changes voltage between stages. A 132/11 kV substation, like those in the UAE order, steps power down from 132 kV to 11 kV.

Distribution

Distribution delivers power at lower voltage from the substation to homes, shops and factories. The distribution company (DISCOM) that sends the bill runs this last stage.

Takeaway: transmission moves power in bulk, distribution delivers it to the meter, and both have to be paid for.

How Do Grid Costs Reach Your Bill?

Grid costs reach a bill through three routes, each set through a regulator's order before a DISCOM recovers it.

• ✓Transmission charges pay for the inter-state and intra-state lines. Under the Central Electricity Regulatory Commission (Sharing of Inter-State Transmission Charges and Losses) Regulations, 2020, DISCOMs are billed in four components — national, regional, transformer and AC system. The national component includes the lines built for renewable energy projects.
• ✓Wheeling charges pay for the DISCOM's own local network. State regulators approve a per-unit wheeling charge for each voltage level.
• ✓Line losses are the units that are bought but never billed. A DISCOM buys more power than it sells, and the cost of the approved loss sits inside the tariff.

Wheeling charges rise as voltage falls, because low-tension consumers use more of the network. The table shows the wheeling charges and wheeling losses that the Maharashtra Electricity Regulatory Commission approved for Tata Power's Mumbai distribution network for FY 2025-26, in its MYT Order in Case No. 210 of 2024.

A low-tension unit carries a wheeling charge 69 times the extra-high-tension one in that order. Most household bills do not show these grid costs as separate lines; they sit inside the energy charge and the fixed charge. Maharashtra is one state where a wheeling charge appears as its own line; our MSEDCL bill calculator does not model that line. For the lines that do appear on most bills, see fixed charges vs FCA.

Takeaway: grid costs are real and regulator-approved, but on most bills they are folded into charges you already see.

What Is the Difference Between AT&C Loss and T&D Loss?

AT&C loss and T&D loss measure two different gaps, so the two percentages are not interchangeable.

• ✓T&D loss counts energy only: units generated that never reach a meter. India recorded a T&D loss of 16.64% in FY 2023-24 — 3.55% in transmission and 13.09% in distribution — as reported by The Sunday Guardian on 27 July 2025, citing Ministry of Power data given in the Lok Sabha.
• ✓AT&C loss counts energy and money: it adds units that are supplied but not billed, and bills that are not paid. It is calculated as 1 − (billing efficiency × collection efficiency).
• ✓Distribution carries most of the loss in both measures. In the FY 2023-24 figures, distribution accounts for 13.09 of the 16.64 percentage points.

Takeaway: T&D loss is an engineering number, AT&C loss is an engineering-plus-billing number — check which one a headline is quoting.

AT&C Losses by State (FY 2024-25)

AT&C losses by state range from 6.61% in Kerala to 22.76% in Madhya Pradesh among the nine states below, against a national figure of 15.04%. The table lists the FY 2024-25 AT&C loss for each state, linked to its electricity bill calculator.

These figures come from the Ministry of Power's 14th Integrated Rating and Ranking of Power Distribution Utilities, which covers 65 utilities, as reported by T&D India on 27 January 2026 and, for Uttar Pradesh, by SolarQuarter on 31 January 2026. The table is limited to the nine states for which we found a reported figure; it is not a full ranking. Each DISCOM also works to a loss target: Madhya Pradesh's East Discom recorded a 28.04% distribution loss against a 15.5% target, according to the same Sunday Guardian report.

Takeaway: the same unit of power costs a DISCOM more to deliver in a high-loss state than in a low-loss one.

Why Do Renewables Need New Lines and Substations?

Renewables need new lines and substations because solar and wind plants are built where the resource is, not where the demand is. Carrying that power to the grid is called evacuation, and three milestones show its scale in India.

• ✓The gap was identified in 2012. A Power Grid Corporation of India study found evacuation infrastructure near renewable sites insufficient, according to the Ministry of Power.
• ✓Green Energy Corridor Phase-I targeted 9,700 circuit km of intra-state lines and 22,600 MVA of substations at a project cost of ₹10,141.68 crore, approved in 2015.
• ✓Green Energy Corridor Phase-III was approved by the Union Cabinet on 30 September 2026 with an outlay of ₹1,86,405 crore to evacuate up to 135 GW: ₹1,36,378 crore for intra-state transmission and ₹50,000 crore for 50 GWh of battery storage, with central assistance of ₹54,082 crore and completion set for FY 2032-33.

The same driver appears in the L&T report, which ties the orders to grid strengthening and renewable energy evacuation. Network charges also shape who pays for the grid when large consumers buy power directly, which our note on Gujarat's open access additional surcharge covers.

Takeaway: more renewable capacity means more lines and substations, and those are planned and funded years ahead.

What Does This Mean for Consumers Over Time?

For consumers, new grid investment and lower losses pull in opposite directions on cost, and neither produces an automatic change in a bill.

• ✓New assets are paid for through transmission and wheeling charges only after a regulator approves them. Of Green Energy Corridor Phase-III's ₹1,86,405 crore outlay, ₹54,082 crore is central financial assistance.
• ✓Lower losses reduce the power a DISCOM buys for each unit it bills. The national AT&C loss fell from 15.97% to 15.04% in one year.
• ✓Supply shortfalls act through a different line, the monthly fuel and power purchase adjustment, as our note on India's September 2026 power shortage explains.

We make no claim about future tariffs. The only reliable source for what a consumer pays is the current tariff order of that state's regulator, which is what our electricity bill calculators are built on.

Takeaway: transmission and distribution costs reach a bill only through regulator-approved charges and losses, never directly from a news headline.

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