Montek suggests higher power tariffs in peak hours

Raising concerns about the health of power distribution utilities, Planning Commission Deputy Chairman Montek Singh Ahluwalia today suggested introduction of different electricity tariffs for peak and off-peak hours.

Power distribution companies in the country are estimated to have incurred a staggering loss of about Rs 70,000 crore in the last fiscal and the amount is expected to be as much as Rs 1,16,000 crore by 2014-15.

Speaking at the power ministers conference on distribution reforms here, he said it is easy to have a "time of the day tariff", where the rate is slightly higher for the peak period.

"The real issue is the difference between peak and non-peak is sufficiently large to actually encourage a switch. That probably requires higher tariffs during peak period and may be even lower tariffs during non-peak periods," he said.

Peak period generally refers to the time when electricity is high compared to ordinary time.

There has always been a mismatch between power tariffs and the cost of generating electricity, which is hurting the financial health of power distribution companies (Discoms).

Going by estimates, electricity distribution losses touched about Rs 70,000 crore in 2010-11.

Power Secretary P Uma Shankar noted that electricity distribution losses are expected to reach as much as Rs 1,16,000 crore by 2014-15.

"Losses are seeing an upward trend... We have to improve the health of Discoms," he said.

The main focus of the power ministers' conference is the financial health of Discoms and reasons for huge losses incurred by them. The country has about 73 power distribution entities.

"To tackle the commercial losses, strong political will is required. Curbing power pilferages and improving governance can bring down the losses," Minister of State for Power KC Venugopal said.

The government has taken various initiatives, including Restructured Accelerated Power Development and Reform Programme (R-APDRP), to reduce the Aggregate Technical and Commercial (AT&C) losses in power distribution area.

According to Power Minister Sushilkumar Shinde, more than Rs 40,000 crore have already been spend on R-APDRP.

AT&C losses in the country are pegged in the range of 20 to 40%.