Power from Central Generating Stations to beneficiary States or Union Territories is allocated in accordance with formula for allocation of power as per extant guidelines from April, 2000. As per these guidelines, allocation of power is made to the States and UTs in two parts: firm allocation of 85% and 15% unallocated power for allocation by the Government for meeting the urgent or overall requirement.

The firm allocation includes allocation of 12% free power to the affected States and 1% for local area development in case of Hydro Power Stations and 10% (paid) power to the home State in case of Thermal and Nuclear Power Stations.

The balance (72% in case of Hydro and 75% in case of Thermal & Nuclear) power is distributed among the States and UTs of the region in accordance with the pattern of central plan assistance and energy consumption during the previous five years, both factors having equal weightage. Central plan assistance is determined in accordance with the Gadgil formula, in which population of the States is also taken into consideration. In case of joint venture projects, the equity contributing State gets benefit in firm allocation in accordance with their equity contribution.

In 14 new projects of NTPC Ltd., Central Government has (in January, 2011) approved allocation of 50% of power to Home State, 15% unallocated power at the disposal of Government of India and 35% to other constituents (except Home State) of that region on the basis of extant guidelines on allocation of power giving equal weightage to central plan assistance and energy consumption by each State of the Region for preceding 5 years.

Similar dispensation has also been provided by the Government in January, 2011 in respect of new projects of Nuclear Power Corporation. In Kudankulam Nuclear Power Plant (4x1000 MW) and Kalpakkam (2x500 MW), Tamil Nadu has 50% allocation.