Cabinet gives nod to new power tariff policy

The union cabinet on Wednesday approved a new power tariff policy designed to promote clean energy, better regulation of distribution companies (discoms), and ease of the process of doing business in the sector.

"For the first time, a holistic view of the power sector has been taken and comprehensive amendments have been made in the tariff policy 2006," Power Minister Piyush Goyal told reporters.

"The amendments are also aimed at achieving the objectives of Uday (Ujwal Discom Assurance Yojana) with a focus on 4 Es... electricity for all, efficiency to ensure affordable tariffs, environment, and ease of doing business to attract investments to the sector and ensure financial viability," he said.

The new policy also proposes to strengthen the regulatory mechanism so that discoms become more efficient in serving their consumers.

Highlighting India's international obligations towards reversing climate change under the COP 21 declarations, Goyal said the new tariff policy seeks to boost renewable energy generation.

"In order to promote renewable energy and energy security, 8 percent of electricity consumption excluding hydro power, shall be from solar energy by March 2022, as part of the revised Renewable Purchase Obligation (RPO)," the minister said.

"We have also introduced a Renewable Generation Obligation, whereby new thermal plants have to have a renewable component to their generation," he added.

Goyal said the new tariff policy had special provisions to promote the philosophy of "waste-to-wealth".

"To release clean drinking water for cities and reduce pollution of rivers, thermal plants within a 50 km of radius of sewage treatment facilities will use treated sewage water," Goyal said, adding that Nagpur municipality, in his home state of Maharashtra, is already implementing such a project.

The new policy will also allow distribution companies to buy any quantum of power produced from waste.

For the promotion of hydro projects, Goyal said these will be allowed to charge tariffs on a cost-plus basis through long term power purchase agreements (PPAs), and will be exempt from competitive bidding till August 15, 2022.