PowerMin's meeting today to discuss amendments to tariff policy

The power ministry, which has released draft amendments to the National Tariff Policy to further promote competition and reduction in distribution losses, would be meeting on Friday to discuss the amendments with key stakeholders.

The ministry has proposed competitive bidding process and power purchase agreements for the renewable energy sector, stable renewable power obligation regime to promote renewable energy sources, cuts in cross subsidies and encouragement of open access. Further, the ministry has proposed that consumers below the poverty line with a consumption of 30 units per month would continue to receive special support through cross subsidy without re-examination of the provision after five years.

The ministry has proposed a road map of reduction of cross subsidies to be specified by state electricity regulatory commissions (SERCs) in line with the spirit of the Electricity Act, 2003. SERCs may calculate cross subsidy surcharge based on the estimation that the distribution company will avoid purchase of the quantum of power for which open access has been sought. This can be adopted in areas where there are no power shortages. For the hydro sector, the ministry has proposed that the graded reduction in percentage of allowable merchant sales will be limited to delays attributable to the developer. This is in view of the time and cost over runs involved due to the reasons which are beyond the control of the developers.

R V Shahi,  former power secretary told Business Standard: “Since the last seven years, the tariff policy has been implemented. However, based on that experience, a review is needed in respect of cross subsidy surcharge which has been responsible to some extent in delaying the open access for power supply, hydro power tariff, tariff for renewable sources of energy and costly power purchases by distribution companies.”

Ajoy Mehta, managing director, Maharashtra Electricity Distribution Company (MahaVitaran), said most distribution companies are in financial stress which is slowing the growth of the power sector in the country. “The proposed amendments are welcome as they should provide the right environment for growth with financial stability.”

Jayant Deo, founder member, Maharashtra Electricity Regulatory Commission, said the proposed amendments will help in the development of a competitive power market. The formula for arriving at cross subsidy surcharge and tariff deregulation of open access consumer category would help consumers at large.