New power tariff policy supports low rates, smart tech

The Union Cabinet on Wednesday approved amendments to the power tariff policy that aims to tighten regulations for setting rates and promote clean energy.

The policy, which is governed by the Electricity Act, was under revision since 2011. It has nearly 30 major amendments and a few minor ones, aimed at ensuring uninterrupted supply to all consumers by 2021-22.

To bring down rates, the policy suggests several measures, including microgrids for remote villages and small power plants near coal washeries. It has a provision for sale of un-requisitioned power in the spot market through power exchanges. "The proceeds will be shared among power producers and the state with which it has signed the sale pact," said Piyush Goyal, minister of state for coal, power and renewable energy.

The policy allows cost pass-through for use of imported and e-auctioned coal that producers of power in projects awarded through auctions have to use because of a shortfall in contracted supply by Coal India.

State electricity regulatory commissions must reserve a minimum percentage for purchase of solar energy, so that it reaches eight per cent of total energy consumption, excluding hydro electricity, by March 2022.

New coal- or lignite-based thermal power plants after a specified date are to "establish/procure/purchase renewable capacity as prescribed by the central government".

Existing plants can set up such capacity subject to approval of procurers. No inter-state transmission charges and losses are to be levied for renewable energy till notified by the central government.

All inter-state transmission projects will be developed through competitive bidding, except projects of strategic importance, those involving technical up-gradation or those needing urgent completion. Power ministry officials said the list of exceptions had been reduced to bring more investment into the sector.

POWERING INDIA

• Aims to ensure uninterrupted power supply to all by 2021-22
• New rules for setting rates and to promote clean energy
• Microgrids for remote villages and small power plants near coal washeries
• Allows sale of un-requisitioned power in the spot market
• Mandatory minimum purchase for clean energy
• Allows cost pass-through for use of imported and e-auctioned coal
• All new inter-state transmission projects through competitive bidding
• Smart meters compulsory for consumption over 200 units

"Competition will reduce the cost of transmission and lead to timely execution of projects with flexibility to meet emergencies. The consumer will benefit from competition and efficiency in transmission pricing," said Goyal. Intra-state transmission projects above a cost threshold will be developed by state governments through competitive bidding.

"It shall be compulsory for consumers to use smart meters with consumption over 500 units per month by December 2017 and with consumption over 200 units per month by December 2019," said the policy statement.

The central commission has been given the right to introduce norms for ancillary services necessary for maintaining power quality, reliability and security of the grid, including the method of sharing charges.