Big relief for consumers, power minister RK Singh says won’t allow losses to be passed on

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Published: December 7, 2017 6:12:17 AM

To ensure stricter UDAY targets compliance by electricity discoms, the government will mandate through a new law that their losses due to pilferage/theft exceeding 15% can’t be considered for tariff determination.

RK Singh, UDAY, electricity discoms, tariff determinationTo ensure stricter UDAY targets compliance by electricity discoms, the government will mandate through a new law that their losses due to pilferage/theft exceeding 15% can’t be considered for tariff determination.

To ensure stricter UDAY targets compliance by electricity discoms, the government will mandate through a new law that their losses due to pilferage/theft exceeding 15% can’t be considered for tariff determination. Power minister RK Singh told FE’s Anupam Chatterjee that the move would mean additional aggregate technical and commercial (AT&C) losses arising from discoms’ inefficiency are not passed on to consumers. Excerpts from the interview:

How do you plan to supply 24X7 quality power to all at affordable rates?
The people have the right to 24X7 power supply, and the discoms need to tie-up with capacities to maintain uninterrupted electricity supply. Through the Electricity Act, 2003 amendment, I am going to introduce a penalty mechanism for load sheddings due to non-technical faults. The bulk of the demand will have to be covered by long-term and mid-term power purchase agreements. I will also implement the tariff policy which caps cross-subsidy charges for industrial consumers at 20%. This would lower the industrial power tariffs, which are currently at unviable rates of `7-8/unit. This is hurting the Make in India initiative and the overall growth of power demand. I will reverse the trend of discoms putting burden of power theft and its own inefficiency on paying consumers through higher tariffs. I am telling the states that the permissible loss to be considered for determining power tariff should not be more than 15%. You (discoms) either find ways to stop the thefts or ask your states to subsidise, but don’t pass through to consumers. This will restrict tariff rise for regular consumers.

How do you think the discoms can reduce their AT&C losses?
I have a roadmap to achieve that. Firstly, everything should be metered, right from feeders, transformers and consumers. Use pre-paid meters to avoid payment defaults. Do away with the human element in billing and collection. Smart meters with two-way communication can be used for larger communication, where we can also monitor power usage. Manipur’s discom losses have come down by 50% after installing pre-paid meters in the towns. Even after this, if one notices a particular feeder bearing heavy losses, the central government will provide the money to lay tamper-proof cables in that feeder area. If the problem persists even then, give it out to a private franchisee which would be able to stop theft. I am also suggesting setting up special police stations and courts for Electricity Act cases. Discoms have to implement such steps if they want to remain viable after the implementation of the 24X7 power scheme.

When and how would consumers get to choose their electricity supplier?
The segregation of carriage and content is going to change the overall structure of the existing power distribution system. This will allow choice to consumers to choose their electricity supply company, but a number of measures will be needed to implement this. Firstly, the existing discoms will have to segregated into separate content and carriage business units. Then, on the content side, we can bid out some areas for private players to come and compete. So the road-map has to be consolidated. The basic objective of separating carriage and content is bringing down losses by inviting private players.

How do you plant to make hydro power viable again?
We are coming up with new ways to cut hydro-power tariffs. Since hydro assets are a combination of power and irrigation, there must be a segregation in costs. Only the investment that has gone exclusively for the electricity aspect should be considered to determine its tariff. Secondly, since the life of hydro projects is 80-90 years, we are finding options to depreciate the investments for about 25 years, from the current practice of 12 years. This would help us reach a flat levelised hydro tariff of `1.5-2/unit. Thirdly, the tenure for loans in such projects should also be at least 20-25 years. These steps should make hydro power viable, and there might not be any need to use the `16,000 crore interest-subvention plan proposed earlier. We plan to bring hydro power under the renewable category, but we have not decided yet if it would also enjoy the transmission charge discounts received by other renewable energy sources.

Do you see Indian solar companies gaining from the success of ISA?
Owing to our huge renewable energy capacity addition in a short span, Indian companies have gained substantial experience in solar installations. Member of ISA from Africa and Latin America are seeking Indian guidance to deploy their renewable capacity. Indian companies should benefit from this. Additionally, the Indian government has set aside about $2 billion to fund solar projects in ISA member countries. Experts from renewable-specialist organisations like SECI can also help the ISA-countries in their solar missions.

What are your views on the anti-dumping probe against Chinese solar equipment?
Currently we don’t have the domestic cell and module manufacturing capacity to support the growth target of having 100 gigawatt (GW) solar capacity by 2022. Even the local manufacturers have to import component such as wafers to make solar equipment. The decision on anti-dumping has to be taken by the ministry of commerce. But even if the anti-dumping duty is imposed, it should be implemented prospectively, making sure that developers who have already won contracts by quoting the lowest tariff in the auctions, are not adversely affected by this. Legal and tax regimes, as per the day of the bidding, would prevail.

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