DNA EXCLUSIVE: Centre wants power tariff to be in 20% range of cost of supply

The Union power ministry, along with states, is planning broad-based reforms that includes rationalising tariffs within 20% range of cost of supply and reducing the number of tariff categories.

The development comes amid falling plant load factor and a large amount of generation capacity lying idle for want of buyers and aims to improve quality of power supply and minimise load shedding for non-technical reasons.

For a start, a roadmap will be prepared to restrict cross-subsidies to 20% and bring in tariff reforms through simplification of consumer tariff categories and rationalisation of electricity tariff.

The Centre wants states to review the existing tariff categories and bring them down to five primary categories with recommended sub-categories. Besides, it wants states to ensure that the tariff should be within ± 20% of the cost of supply from March 2019.

States will ensure that distribution companies (Discoms) will not only enter into power purchase agreements (PPAs) but also honour them particularly for wind and solar sector, where tariff has been discovered through a transparent and competitive bidding process.

The government proposes to amend the tariff policy to provide that from January, 019 losses beyond 15% may not be compensated by increase in tariff.

He said that the target under Ujwal DISCOM Assurance Yojana (UDAY) scheme was to reduce the aggregate technical and commercial losses to 15%.

This apart, states will also ensure compliance of renewable purchase obligation (RPO) including compliance through a mechanism of purchase of REC (renewable energy certificates), as per revised tariff policy and RPO trajectory notified by Ministry of Power on July 22, 2016.

Further, in a bid to expedite the renewable energy capacity addition of 178 gigawatt by the end of 2022, the Centre wants states to ensure forecasting and scheduling of renewable energy for large scale grid integration and set up the necessary infrastructure for metering & communication at all substation levels for real time data generation.

A Union power ministry official told DNA Money, "The basic problem in the sector which is needed to be urgently addressed is to reduce the gap between the energy supplied and energy billed. This has to be addressed by strengthening the system to reduce transmission and distribution losses. With the goal of 24X7 power supply, the quantum of electricity consumption is likely to increase and so the loss of electricity. Therefore, there is an urgent need to plug the transmission and distribution losses.''

He said that the Centre would issue a directive to clear the outstanding electricity dues of government departments worth Rs 31,465 crore to Discoms for the current year and minimum 25% dues of previous years by March 2018. As per the provision of UDAY scheme, dues should have been cleared by states by October 2016.

THE ROADMAP

• The Centre wants states to review the existing tariff categories and bring them down to five primary categories with recommended sub-categories
   
• It wants states to ensure that the tariff should be within ± 20% of cost of supply from March 2019.