Draft Tariff Policy Can Revolutionise Power Sector

The proposal to end tariff differentiation is a much-needed reform in the power sector but the key to reaping real benefits of the move lies in its implementation and involvement of consumers in the reform process, as said by the Pradeep S. Mehta founded non-profit Indian think tank.

CUTS International is a Jaipur-headquartered organisation and one of the leading think tanks working on economic and public policy issues.

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It said as the Power Ministry is planning to revise the tariff policy for the power sector. It has already been approved by a group of ministers and likely to be put before the Union Cabinet for approval soon.

According to CUTS International, quoted PTI that “termed as one of the biggest reforms in the power sector, the central government has proposed to end tariff differentiation between electricity consumers by charging them as per consumption rather than on the basis of end-user.”

The government has proposed various measures in order to deal with the ailing power sector, and among them other the progressive reforms proposed through the draft amended national tariff policy, are to lay down standards for Discoms to ensure 24X7 power, penalising excessive load shedding and banning cost pass on to consumers for commercial losses of over 15 per cent during operations.

Speaking on such amendments for the power sector, Udai S Mehta, deputy executive director at CUTS International, said quoted PTI that these are much-needed reforms which have potential to completely revolutionise the sector and have prospects for realising India’s dream of Make in India by making power tariff competitive, at the same time reducing the plight of consumers with the reliable quality of power and greater accountability within distribution companies.

Presently, there are fifty to sixty power-consuming categories within the country, which can be reduced to six on a voltage basis through the proposed policy.

The report further shows concern about that states has currently expressed reservations against the policy, especially from the implementation perspective. Thus, the challenge would be to practically implement these measures on the ground, especially with the complex political economy which plague the sector.

Meanwhile, Mehta suggested that consumers need to be at the core of the transition and concerns and challenges of poor and vulnerable consumers at the margins should be optimally built in the reform process.

Earlier, the Institute for Energy Economics and Financial Analysis (IEEFA) in its report said that policy certainty around renewable energy will increase domestic and international investment in India.