HT or LT Connection for a Factory in Maharashtra

gradeelectricalswe

Sep 26

6 min read

Almost every guide to this decision tells you the same thing: go HT and your per-unit rate drops. For a Maharashtra factory on the current tariff, that is wrong.

Under the MERC order in force for FY 2026-27, HT industrial supply costs more per unit than LT industrial supply, and the monthly demand charge is higher too. The case for HT is real, but it is not the one usually made.

HT and LT industrial tariffs compared

From the MERC tariff schedule effective 1 April 2026.

Category	Demand or fixed charge	Energy charge	Wheeling charge	Total variable
LT V Industry, 0 to 20 kW	Rs 650 per connection per month	Rs 6.26	Rs 1.60	Rs 7.86
LT V Industry, above 20 kW	Rs 420 per kVA per month	Rs 7.66	Rs 1.52	Rs 9.19
HT I (A) Industry	Rs 650 per kVA per month	Rs 8.44	Rs 0.81	Rs 9.25

Read the bottom two rows together. Against LT above 20 kW, HT costs 6 paise more per unit and Rs 230 more per kVA every month. On a 300 kVA contract demand that is Rs 69,000 a month, or Rs 8.28 lakh a year, in demand charges alone, before a single unit is consumed.

This is not a one-year anomaly. For FY 2025-26 the gap ran the same way: LT above 20 kW at Rs 9.15 total variable against HT at Rs 9.42, with demand charges of Rs 400 and Rs 600 per kVA.

HT does win on wheeling, at Rs 0.81 against Rs 1.52, because you take supply at high voltage and the network carries it a shorter distance in the low-voltage domain. That saving is swallowed by a higher energy charge.

What the connection itself costs

Service connection charges approved in the same order, for a three-phase supply:

Supply and load	Approved charge
LT, motive power up to 27 HP or other loads up to 20 kW	Rs 7,979
LT, above 27 HP up to 107 HP, or loads above 20 kW up to 80 kW	Rs 13,960
LT, above 107 HP up to 214 HP, or loads above 80 kW up to 160 kW	Rs 23,920
HT, 11 kV supply up to 1,000 kVA	Rs 2,43,630
HT, 11 kV supply above 1,000 kVA up to 5,000 kVA	Rs 2,85,710

The jump from LT to HT is roughly ten times, and that is only what you pay MSEDCL. On HT you also build and own the substation: transformer, HT panel with vacuum circuit breaker, protection relays, CT and PT units, earthing, and the civil work under all of it. You maintain it, you test it, and you carry the statutory obligations that come with owning high voltage equipment.

When the decision is not yours

LT V applies to industrial use taken at low or medium voltage. HT I applies to supply taken at high voltage, meaning 11 kV and above.

Past a certain load MSEDCL will not give you LT. Its own connection charge schedule stops at 214 HP, or 160 kW of other load, and everything above that sits in the HT slabs. Where exactly your site falls depends on the load you apply for and what the local network can carry, so confirm the threshold with your MSEDCL section office before you design around it. We have seen the answer vary by area.

Below that line you have a genuine choice. Above it, the question is not whether to go HT but how to build the substation properly.

The contract demand trap

This is what catches factories that have already moved to HT, and it is worth understanding before you sign.

The order states it plainly: a consumer on a demand-based tariff who exceeds their contract demand is billed at the applicable demand charge rate for the demand actually recorded, and charged an additional amount at 150% of the applicable demand charge on the excess.

So the excess is not simply billed. It is billed, and then surcharged at one and a half times the rate on top.

If you run a captive power plant and have not opted for standby capacity, exceeding contract demand is charged at 200% instead.

There is a matching trap on the LT side. An LT consumer with a sanctioned demand below 20 kW who records above 20 kW gets billed on the tariff for the slab the recorded demand falls into, for that billing cycle. A single month of overload moves you up a slab.

The practical consequence is that contract demand is not a number to minimise. Set it too low and the penalty structure erases the saving.

Where HT actually pays back

None of the above means LT is the better answer. It means the reason for going HT is not the unit rate.

Load factor incentive. Maharashtra operates a load factor incentive on HT supply, and the threshold is demanding at 92.5%. A plant running continuous shifts at steady load can earn against it. A single-shift operation with peaky demand cannot.

Time of day. HT consumers are on mandatory time-of-day slots. If your process can move load into off-peak hours, the arbitrage is real. If your production schedule is fixed by customers, it is not.

Bulk consumption rebates. These apply at high monthly consumption, which is another way of saying they reward plants that are genuinely large.

Voltage stability. Heavy induction motors, furnaces and welding loads behave better on a dedicated transformer you control than on a shared LT network. This is an engineering reason rather than a tariff one, and for some plants it is the deciding factor on its own.

Every one of these rewards the same profile: high load, high utilisation, steady demand. That, not the per-unit rate, is the test.

How to decide

Get your actual connected load and expected maximum demand in kVA, not a guess from the equipment nameplate totals.
Check whether MSEDCL will even offer LT at that load in your area.
If you have a choice, work out your likely load factor. Below roughly 60% utilisation, the HT demand charge is dead weight.
Model both tariffs against twelve months of expected consumption, including the demand charge, not just the unit rate.
Add the capital cost of the substation and its ongoing maintenance to the HT side.
Set contract demand against your real peak with headroom, and remember what the 150% surcharge does to a bad estimate.

If the numbers land close together, stay on LT. The cheapest substation is the one you did not have to build.

Frequently asked questions

What is the difference between an LT and an HT new connection?

LT supply is delivered at low or medium voltage from MSEDCL's own distribution transformer. HT supply is delivered at 11 kV or above, and you install and own the substation that steps it down. The connection charge for 11 kV up to 1,000 kVA is Rs 2,43,630 against Rs 13,960 for an LT connection up to 107 HP.

How do I check whether I am on LT or HT?

Your bill shows the tariff category. LT V is LT industry, HT I is HT industry. HT bills are calculated on kVA of contract demand and kVAh of consumption, and carry a demand charge line.

What is contract demand?

The maximum demand in kVA that MSEDCL has agreed to supply you and that you have agreed to pay for monthly, whether you use it or not. It is set in your agreement, not by your actual usage.

What is the penalty for exceeding contract demand?

You are billed the applicable demand charge on the demand actually recorded, plus an additional 150% of the applicable demand charge on the portion above your contract demand. For captive power plant consumers with no standby capacity opted, the additional charge is 200%.

Is HT electricity cheaper than LT in Maharashtra?

Not at current tariffs. For FY 2026-27, HT industry runs at Rs 9.25 per kVAh total variable against Rs 9.19 for LT industry above 20 kW, and the demand charge is Rs 650 per kVA against Rs 420. HT earns its place through load factor incentives, time-of-day scheduling and voltage stability at high load, rather than through a lower unit rate.

Sources

MERC Order, Case No. 75 of 2025, dated 25 March 2026. Tariff schedules for FY 2025-26 and FY 2026-27.

MERC Order, Case No. 217 of 2024, the 5th MYT Control Period order covering FY 2025-26 to FY 2029-30. Service connection charges, contract demand penalty, and category applicability.