RSTV: POLICY WATCH- POWER TARIFF POLICY
Introduction:
The Government in the proposed draft amendments to the National tariff policy, 2016 has included the provision for imposition of penalties on the Distribution companies for power cuts other than force majeure conditions or technical faults by Appropriate Commission. In the draft amendments to the tariff policy, it has been proposed to stipulate that the State Electricity Regulatory Commissions and Joint Electricity Regulatory Commissions shall not consider AT&C losses exceeding 15% for determination of tariff. The proposed Amendments in Tariff Policy include amendments in provisions related to Generation, Transmission and Distribution of electricity. Power Minister RK Singh said that the amendments would be unveiled soon.
National Tariff Policy, 2016
For the first time a holistic view of the power sector was taken and comprehensive amendments had been made in the Tariff policy. The amendments were also aimed at achieving the objectives of Ujwal DISCOM Assurance Yojana (UDAY) with the focus on 4 Es: Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future, Ease of doing business to attract investments and ensure financial viability.
Highlights:
- Electricity:
- 24X7 supply will be ensured to all consumers and State Governments and regulators will devise a power supply trajectory to achieve this.
- Power to be provided to remote unconnected villages through micro grids with provision for purchase of power into the grid as and when the grid reaches there.
- Affordable power for people near coal mines by enabling procurement of power from coal washery reject based plants.
- Efficiency:
- Reduce power cost to consumers through expansion of existing power plants.
- Benefit from sale of un-requisitioned power to be shared allowing for reduction in overall power cost.
- Transmission projects to be developed through competitive bidding process to ensure faster completion at lower cost.
- Faster installation of Smart meters to enable “Time of Day” metering, reduce theft and allow net-metering.
- Lower power cost by creating transmission capacity for accessing power from across India.
- Environment:
- Renewable Power Obligation (RPO): In order to promote renewable energy and energy security, 8% of electricity consumption excluding hydro power, shall be from solar energy by March 2022.
- Renewable Generation Obligation (RGO): New coal/lignite based thermal plants after specified date to also establish/procure/purchase renewable capacity
- Affordable renewable power through bundling of renewable power with power from plants whose PPAs have expired or completed their useful life.
- No inter-State transmission charges and losses to be levied for solar and wind power.
- Swachh Bharat Mission to get a big boost with procurement of 100% power produced from Waste-to-Energy plants.
- To release clean drinking water for cities and reduce pollution of rivers like Ganga, thermal plants within 50 km of sewage treatment facilities to use treated sewage water.
- Promotion of Hydro projects through long term PPAs and exemption from competitive bidding till August 2022.
- Ancillary services to support grid operation for expansion of renewable energy.
- Ease of Doing Business:
- Generate employment in coal rich Eastern states like Odisha, West Bengal, Jharkhand, Chhattisgarh etc. by encouraging investments. States allowed to setup plants, with up to 35% of power procured by DSICOMs on regulated tariff.
- Remove market uncertainty by allowing pass through for impact of any change in domestic duties, levies, cess and taxes in competitive bid projects.
- Clarity on tariff setting authority for multi-State sales. Central Regulator to determine tariff for composite schemes where more than 10% power sold outside State.
Highlight of certain new proposed amendments:
- Consumer should not be asked to pay the price of inefficiencies of the Discom, therefore AT&C Losses in excess of 15% shall not be passed on to the consumers but shall be borne by Discom.
- 24 hours supply of adequate and uninterrupted power may be ensured to all categories of consumers by March, 2019 or earlier. In case of power cuts other than in force majeure conditions or technical faults an appropriate penalty, as determined by the SERC shall be levied on the Distribution Company and credited to the account of the respective consumers.
- Standards of performance for Distribution Licensee to include continuity and reliability of supply, quality of supply, timeframe for disposing application for connection/ disconnection/enhancement or reduction of connected load and complaints of disruption in supply.
- Subsidy to any category of consumers would be required to be given through Direct Benefit Transfer i.e. directly in the bank account of such consumers.
- Appropriate Commission would ensure that cross-subsidies are reduced and the tariff for all consumer categories are brought within ±20% of the average cost of supply effective from 1st April 2019 or earlier.
- Simplification of tariff categories and rationalization of retail tariff.
- Suitable provisions for promotion of Electric Mobility- No license would be required for setting up any charging stations for Electric Vehicles.
Suggestion and Discussion:
- Regulatory commission should put in system whereby they can establish objectively weather the power cut has happened due to unavoidable technical reasons or due to willful default.
- Discom do not have enough electricity to supply during peak summers.
- Unscheduled power cuts is done by Discom in order to reduce their purchasing of electricity generation.
- The proposal is already in place in Delhi, we need to consider it and implement elsewhere.
- There should be partnership between government and Discom.
- Investment should be done in technology and manpower to realize the target.
- Loses should be targeted at transformer level.
- Difference between lowest tariff and highest tariff is too high in India.
- In China and USA, lowest tariff is for industry but in India it is the highest and it is lowest for domestic consumers.
These proposed amendments will benefit power consumers in multiple ways. While reducing the cost of power through efficiency, they will spur renewable power for a cleaner environment and protect India’s energy security.
These will ensure availability of electricity to consumers at reasonable and competitive rates, improve ease of doing business to ensure financial viability of the sector and attract investments, promote transparency, consistency and predictability in regulatory approaches across jurisdictions. It will further facilitate competition, efficiency in operations and improvement in quality of supply of electricity.
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