Cabinet approves Power Tariff Policy changes to ensure 24X7 affordable power for all

The union cabinet today approved amendments to the power tariff policy with view to ensure 24x7 supply of electric power at affordable rates for all, taking a holistic view of the power sector.

The cabinet chaired by the Prime Minister Narendra Modi approved the proposal of the ministry of power for amendments in the Tariff Policy 2006, also aimed at achieving the objectives of Ujwal DISCOM Assurance Yojana (UDAY).

The focus of legislation in on 4 Es: Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future and Ease of doing business to attract investments and ensure financial viability.

The New power tariff policy seeks to ensure 24X7 supply to all consumers and state governments and regulators will devise a power supply trajectory to achieve this.

For this, power will be provided to remote unconnected villages through micro grids with provision for purchase of power into the grid as and when the grid reaches there.

For people living near coal mines, affordable power will be made available by enabling procurement of power from plants based on rejected coal at washeries.

In order to reduce power cost to consumers expansion of existing power plants will be undertaken.

Also, benefit from sale of un-requisitioned power will be shared, allowing for reduction in overall power cost. Power cost will be lowered by creating transmission capacity for accessing power from across India.

Transmission projects will be developed through competitive bidding process to ensure faster completion at lower cost.   

Faster installation of smart meters will enable ''Time of Day'' metering, thereby reducing theft and allowing net-metering.

To save environment, promote renewable energy and energy security, government will ensure that eight per cent of electricity consumption, excluding hydro power, shall be from solar energy by March 2022.

New coal/lignite-based thermal plants after specified date will also have to establish/procure/purchase renewable capacity as part of renewable energy obligation.

This will be done through bundling of renewable power with power from plants whose PPAs have expired or completed their useful life.

No inter-state transmission charges and losses will be levied for solar and wind power. Ancillary services will be developed to support grid operation for expansion of renewable energy.

Swachh Bharat Mission is expected to get a big boost with procurement of 100 per cent power produced from Waste-to-Energy plants.

To release clean drinking water for cities and reduce pollution of rivers like Ganga, thermal plants within 50 km of sewage treatment facilities will have to use treated sewage water.

Government will promote hydro projects through long term PPAs and exemption from competitive bidding till August 2022.

For generating employment in coal rich eastern states like Odisha, West Bengal, Jharkhand, Chhattisgarh etc will be encouraged to set up power plants, with up to 35 per cent of power procured by DSICOMs on regulated tariff.

Government will also remove market uncertainty by allowing pass through for impact of any change in domestic duties, levies, cess and taxes in competitive bid projects.

There will also be more clarity on tariff setting authority for multi-state sales. Central regulator will determine tariff for composite schemes where more than 10 per cent power is sold outside a state.

These amendments will benefit power consumers in multiple ways. While reducing the cost of power through efficiency, they will spur renewable power for a cleaner environment and protect India's energy security. They would also aid the objectives of Swachh Bharat Mission as well as Namami Gange Mission through conversion of waste to energy, usage of sewage water for generation and in turn ensure that clean water is available for drinking and irrigation.

The amendments will also ensure availability of electricity to consumers at reasonable and competitive rates, improve ease of doing business to ensure financial viability of the sector and attract investments, promote transparency, consistency and predictability in regulatory approaches across jurisdictions.

It will further facilitate competition, efficiency in operations and improvement in quality of supply of electricity.