The government is banking on the upcoming electricity tariff policy to ensure that more long-term power purchase agreements (PPAs) are signed by electricity discoms. Signalling relief to stressed and stranded electricity generation plants, Union power minister RK Singh, during an interview with Anupam Chatterjee, said his ministry is coming up with the second version of the UDAY policy (UDAY 2) to address certain core issues such as billing-collection inefficiencies and pilferage that cripple the sector.
How do you think 2019 would play out for stranded and stressed power generators?
Power demand is rapidly increasing. Peak power demand of the country breached the 180 giga-watt (GW) mark in October, 10% higher than the highest requirement recorded in FY18. I want to make sure that this increase translates into more PPAs.
The rise in demand coincides with the rampant addition of household connection under the government’s Saubhagya scheme and the reduction in the average duration of power cuts.
But not many long-term PPAs are on the cards right now.
The proposals in the upcoming tariff policy has provision where the regulator would assess if discoms have sufficient long-term and mid-term PPAs to meet their respective annual average demand. Annual average demand would always be lower than the peak demand and this would allow discoms procure additional power from spot markets during phases of higher requirement.
Additionally, the provision of penalty for gratuitous loadsheddings in the tariff policy would also push discoms to have adequate PPAs tied up. Doing loadshedding would be costlier than buying power from the spot markets.
Do you have a timeframe for implementing the proposed electricity tariff policy?
We expect the tariff policy to go to the Cabinet within 30 days. We have recieved the inputs from all states. We have sent a draft note to the other ministries for their comments.
What are your plans to improve the health of the discoms, which continue to report high AT&C losses?
We are currently formulating a new version of the Ujwal Discom Assurance Yojana (UDAY). UDAY 1 primarily reduced the huge debt burden from the discoms. UDAY 2 would be a focussed attack on AT&C losses.
We have identified pilferage and shortcomings in billing and collection as the core problems plaguing the health of the discoms. To address these, we would install smart prepaid meters in three years.
This would be a win-win for consumers and discoms. People generally want to be on the right side of law.
By reducing the complexities in the electricity bill payment process, consumers, especially the poor, can prepay for power according to their convenience.
The discoms would also benefit as they would receive payments in advance, improving the cash-flow.
Many feel that one of the shortcomings of UDAY was the lack of penal provisions.
We are planning to implement some firm provisions, already present in the Electricity Act, through the UDAY 2 scheme. We are planning more special police stations for electricity issues through UDAY 2.
Are you satisfied with the progress of Saubhagya scheme?
I am not satisfied just by the states reporting the saturation of household connectivity through Saubhagya. I want them to verify if there are any households which have been left out from receiving electricity connection. The states are already doing it, but I want to be doubly sure and so I have once again asked the states to rerun this cross-checking campaign.
Before the March 31 deadline, I want to ensure that no willing household has been left out. About 9.42 lakh households were left to be connected on December 31, 2018. We have connected more than 2.4 crore households since the launch of the scheme in October 2017.