Power ministry asks regulators to revise tariffs by April 1 each year

05 Apr 2021 CW Team

The MoP, in a communication to chairpersons of central and all state power regulatory bodies, has sought compliance of legal provisions in the Electricity Act 2003 and the Tariff Policy 2016, which mandate timely determination of the adequate power tariffs by the electricity commissions.

Discom overdue outstanding to generation companies stand at Rs 124,437 crore, despite the government's liquidity infusion scheme under which Rs 75,000 crore have been disbursed to states.

Outstanding loans of discoms are nearly at Rs 600,000 crore. The average revenue gap of distribution utilities is in the range of 72 paise per unit, and the regulatory assets are at Rs 78,000 crore.

Section 64 of the Electricity Act 2003 provides for the determination of cost-reflective tariff by the appropriate commission within 120 days from receipt of tariff petition. Similarly, Tariff Policy 2016 states that the commissions should initiate tariff determination on a suo-moto basis in case the tariff petitions are not filed in time.

The section mandates commissions to ensure the tariff changes are brought into effect from the beginning of each financial year, and under business as usual, no regulatory assets, deferred tariff hikes - are created. The same has also been provided in an order of the Appellate Tribunal for Electricity passed in November 2011.

Furthermore, the liquidity infusion scheme of Rs 130,000 crore special loans to distribution companies, the government is soon likely to bring out a Rs 300,000 crore reforms-linked distribution reforms scheme which will disburse amount only when the discoms achieve targeted milestones.

The government is also working on amendments in the Electricity Act, 2003 for delicensing power distribution segment to introduce competition in the power segment.

Image Source

Also read: ICRA maintains negative outlook on power distribution sector

The government has asked power regulatory commissions to issue tariff orders of all distribution licensees before April 1 of the tariff year and report compliance to the Ministry of Power (MoP) by May 31 every year. The MoP, in a communication to chairpersons of central and all state power regulatory bodies, has sought compliance of legal provisions in the Electricity Act 2003 and the Tariff Policy 2016, which mandate timely determination of the adequate power tariffs by the electricity commissions. Discom overdue outstanding to generation companies stand at Rs 124,437 crore, despite the government's liquidity infusion scheme under which Rs 75,000 crore have been disbursed to states. Outstanding loans of discoms are nearly at Rs 600,000 crore. The average revenue gap of distribution utilities is in the range of 72 paise per unit, and the regulatory assets are at Rs 78,000 crore. Section 64 of the Electricity Act 2003 provides for the determination of cost-reflective tariff by the appropriate commission within 120 days from receipt of tariff petition. Similarly, Tariff Policy 2016 states that the commissions should initiate tariff determination on a suo-moto basis in case the tariff petitions are not filed in time. The section mandates commissions to ensure the tariff changes are brought into effect from the beginning of each financial year, and under business as usual, no regulatory assets, deferred tariff hikes - are created. The same has also been provided in an order of the Appellate Tribunal for Electricity passed in November 2011. Furthermore, the liquidity infusion scheme of Rs 130,000 crore special loans to distribution companies, the government is soon likely to bring out a Rs 300,000 crore reforms-linked distribution reforms scheme which will disburse amount only when the discoms achieve targeted milestones. The government is also working on amendments in the Electricity Act, 2003 for delicensing power distribution segment to introduce competition in the power segment. Image Source Also read: ICRA maintains negative outlook on power distribution sector

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