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Centre, states to consider simpler power tariff system

LiveMint logoLiveMint 02-05-2017 Gireesh Chandra Prasad

New Delhi: Union power minister Piyush Goyal and state ministers will consider the possibility of sharply reducing the number of power tariff slabs to make them uniform across the country and examine ways of re-engineering of power plants to use domestic coal in place of imported fuel at a two-day meeting in the capital starting Wednesday.

The annual meeting of power ministers will also explore ways of enforcing clean energy purchase obligations of power distribution companies and review challenges in achieving 100% rural electrification in difficult terrain and in left wing extremism affected areas.

The agenda of the meeting released here by the Union power ministry said a rationalization of power tariff slabs across the country will improve transparency and may enhance energy consumption as well as bill collection efficiency. It will also make administration easier. The idea is to have about 15 uniform slabs across the country in place of the highly complex system prevalent in states, where slabs vary significantly. In Tamil Nadu, for example, there are 36 slabs, while Andhra Pradesh has 93.

The proposed 15 slabs will have five major classes of consumers-domestic, commercial, agricultural, industrial and institutional—and subclasses based on voltage and consumption. This system will enable providing benefits for “low/efficient consumption and discourage high/wasteful consumption” besides protecting the interests of certain consumers having low paying capacity, said the agenda.

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According to an executive from a state-run power company, who asked not to be named, a restructuring in power tariff, if it results in reduction of cross-subsidy borne by the industry, will make power tariff more competitive for businesses and aid the ‘Make in India’ drive.

“Tariff classification and design requires urgent attention to address issues of simplification of tariff, recovery of fixed costs incurred in the system, flight of open access customers from utilities, managing agricultural subsidy and making industrial tariff competitive,” said Sambitosh Mohapatra, partner at Power and Utilities, PwC India.

Keen to increase consumption of domestic coal, state-run Coal India Ltd has offered high grade domestic coal to power plants importing coal. These plants may need some tweaking of their designs to use domestic coal. The proposal will be discussed by states during the meeting.

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