• New power tariff structure in works, large domestic consumers to be charged more

    The burden of subsidising the power bills of agricultural and low-income families is set to move from industrial consumers to large domestic and commercial consumers of electricity.

    The government plans to introduce a new tariff structure to charge more from large domestic power consumers rather than industrial units that currently share the cross subsidy burden.

    Most states categorise households consuming more than 800 units of power a month as large domestic consumers. The government is also working on simplifying tariff patterns by classifying consumers in two to three categories and sub-categories to bring transparency in power billing.

    An expert committee has been set for this. It comprises senior officials from various states and the power ministry to work on the new tariff structure that encourages energy conservation by residential consumers and reduces the power bill of industrial consumers.

    The committee is also studying the possibility of increasing fixed charges on connected load of domestic consumers to encourage them to surrender unutilised load.

    Most states continue with electricity tariff structures created since their formation and are often criticised for political interventions and biases against industrial units that, despite being regular payees, are levied cross-subsidy and other charges.Domestic power consumption, on the other hand, is subsidised, though tariffs increase with consumption.

    Nowhere in the world except India are power consumers charged for regular payments and bulk consumption. These patterns have never been altered though tariffs have changed over the years. In fact, most countries give sops to industrial consumers onhigher power consumption, a top government official said, not wanting to be identified.

    Encouraging industrial units to increase power usage is the need of the hour since India has moved away from being a power-deficit country to a power-surplus country, said a senior official in the power ministry, who too did want to be named.Industrial units can absorb the excess generation capacity of power plants operating at about 60% of capacity due to lack of demand from distribution utilities and an ongoing economic slowdown.

    The utilisation of thermal power plants may fall to 48% by 2022 as the government plans to add 175 GW of renewable energy capacity and 50 GW of new power projects in the pipeline. The Electricity Act, 2003, enabled industrial consumers to choose their sources of power through open access. States initially implemented the reform with enthusiasm but later started imposing financial and nonfinancial barriers on industries to discourage them from purchasing electricity from sources other than their distribution utilities.

    The Economic Survey 2015-16 highlighted the need for progressive tariff schedules for domestic consumers through which charges for the poor could be reduced and burden on industrial units eased. It said high-cost and low-quality power supply is rendering the units uncompetitive affecting the government’s aim to make India a global manufacturing hub.

    The report said compared to other developing countries, India’s domestic power tariff schedules have greater scope for progressivity. Increase in tariffs for rich households can be achieved while maintaining or reducing tariffs for the poor. It said regulators should undertake broad welfare analysis while deciding on tariff schedules and cross subsidisation rate for different categories. Artturi Lehkonen Authentic Jersey

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