With general elections around the corner, the union power ministry has swung into action and has floated a cabinet note to revise tariff policy under the provision of Electricity Act of 2003.

Provisions of tariff policy are revised from time to time to carry forward reforms in view of dynamic changes in the electricity sector.

The proposed tariff policy 2019 has recommended penalties for discoms failing to supply 24/7 quality power supply. It has set a target of March 2019 for the power distributing companies to ensure 24/7 power supply to every customer.

The state electricity regulator will get to decide penalty on discoms and compensation for consumers if the power distributing companies fail to provide standard electricity supply services and also in case of power cuts.

The new policy has brought in the clause, where state regulatory commission for electricity while deciding new tariff structure will not pass on the losses on account of discoms’ inefficiencies.

It means any discom operating on AT&C (aggregate technical & commercial) losses above 15 percent will not be passed on to the consumers in the form of increased tariff beyond March 2019. In order to bring in more efficiency, tariff policy has proposed bringing AT&C losses to 12 percent once it achieves the 15 percent target.

To ensure there’s no delay in cash flow in the entire electricity value chain, the tariff policy has proposed prepaid smart metering within next three years. Smart prepaid metering will improve cash flow and bring in financial viability to discoms as it will improve billing and collection and lesser cost to consumers.

States providing subsidy for particular category of consumers should now be provided by DBT or Direct Benefit Transfer or any other mode. Clarity in transfer of subsidy is aimed to make states more accountable for making timely payments to discoms as states mostly pay for its subsidy program at the end of the financial year.

The power generating companies are already in financial stress and one of the reason is delayed payment from distribution companies. The tariff policy has brought in provision that discoms will have to pay late payment surcharge to be paid in the form of interest at the market rate.

The policy also pushes for simplification of tariff categories and rationalization of retail tariff as it has become very complex. The idea is that the price of electricity should be based on cost of supply of electricity to the consumer which should primarily depend on voltage of supply, connected load and energy consumed.

First Published:Jan 4, 2019 6:12 PM IST