Government makes two changes to the existing power tariff system

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The Government has made two changes to the current power tariff system by amending the Electricity (Rights of Consumers) Rules, 2020. The introduction of the Time of Day (ToD) tariff and the rationalisation of smart metering provisions are among the changes.

The current amendment to the Rules is a continuation of the government’s efforts to empower power consumers, ensure 24×7 reliable electricity supply at an affordable cost, and maintain a favourable environment for power sector investment, a government statement said.

Rather than being charged the same rate for electricity at all times of the day, the price you pay for electricity will vary depending on the time of day.

The tariff during solar hours (the duration of eight hours in a day as specified by the State Electricity Regulatory Commission) of the day will be 10%-20% less than the normal tariff, while the tariff during peak hours will be 10%-20% higher.

The ToD tariff would apply to Commercial and Industrial consumers with a maximum demand of 10 KW or more beginning April 1, 2024, and to all other consumers except agricultural consumers beginning April 1, 2025.

For customers who have smart metres, the Time of Day tariff will take effect immediately after they are installed.

According to Union Power and New and Renewable Energy Minister Shri R. K. Singh, the ToD is a win-win situation for both consumers and the power system.

“The TOD tariffs, which include separate tariffs for peak hours, solar hours, and normal hours, send price signals to consumers in order for them to manage their load in accordance with the Tariff.” Consumers can reduce their electricity bills by becoming aware of and utilising the ToD tariff mechanism. Because solar power is less expensive, the tariff during solar hours will be lower, benefiting the consumer.

Thermal and hydropower, as well as gas-based capacity, are used during non-solar hours; their costs are higher than those of solar power, and this will be reflected in the Time of Day Tariff. Consumers can now plan their consumption to reduce power costs by scheduling more activities during solar hours when power costs are lower.”

According to the Union Minister, the ToD mechanism will also ensure better grid integration of renewable energy sources, allowing India to accelerate its energy transition. “The ToD tariff will improve the management of renewable generation fluctuations, incentivize demand increases during periods of high RE generation hours, and thereby increase grid integration of larger quantities of renewable power,” the minister said.

The majority of the country’s State Electricity Regulatory Commissions (SERCs) have already implemented ToD tariffs for the country’s large Commercial and Industrial (C&I) consumers. ToD metering at the domestic consumer level will be implemented as part of the Tariff Policy mandate with the installation of smart meters.

The Time of Day (TOD) tariff is widely recognised in the electricity industry as an important Demand Side Management (DSM) measure that is used to incentivize consumers to shift a portion of their loads from peak to off-peak times, thereby improving system load factor by reducing demand on the system during peak periods. There are already several statutory provisions in place to enable and promote the implementation of ToD tariffs (e.g., Tariff Policy, 2016, Electricity Act, 2003, and National Electricity Policy, 2005).

Rules governing changes to the smart metering provision

The rules for smart metering have also been simplified by the government. To avoid consumer inconvenience or harassment, the existing penalties for exceeding the maximum sanctioned load or demand have been reduced.

According to the metering provision amendment, no penal charges will be imposed on a consumer following the installation of a smart meter based on the maximum demand recorded by the smart meter for the period preceding the installation date. The load revision procedure has also been simplified so that maximum demand will only be revised upwards if the sanctioned load is exceeded at least three times in a fiscal year.

Furthermore, smart metres must be read remotely at least once per day, and the data must be shared with consumers so that they can make informed decisions about their electricity consumption.

The government notified the Electricity (Rights of Consumers) Rules, 2020, on December 31, 2020, based on the conviction that power systems exist to serve consumers and that consumers have rights to reliable services and quality electricity.

The Rules aim to ensure that new electricity connections, refunds, and other services are provided on time, and that willful disregard for consumer rights results in penalties for service providers and compensation for consumers.

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