National Tariff Policy: overhaul long overdue

Updated: February 3, 2016 12:02:48 AM

The efficacy of the new power tariff regime will depend on how the changes are implemented.

Policy Change: Power plants operating on regulated tariff can double capacity on same land
Impact: Will promote optimal utilisation of land & other resources and cut down time required for forest and environment clearance

Policy Change: Power plants with tied but unsold capacity can sell such power in the market
Impact: The profit to be shared between producer & procurer. This will improve PLF and lessen fixed cost for consumers

Policy Change: Discoms mandated to procure solar energy amounting to 8% of requirement by 2022
Impact: Will incentivise solar power generation as demand from discoms to rise to fulfill RPO by 2022

Policy Change: New coal/lignite-based plants mandated to establish renewable capacity
Impact: This will catalyse growth and investment into renewable energy sources

Policy Change: No inter-state transmission charges and losses to be levied for solar/wind energy
Impact: This is to make renewable more affordable and alluring as a destination for new investment

Policy Change: Regulators given flexibility to review cross subsidy surcharge formula
Impact: Inflexible formula a reason for poorly developed open access. Flexibility to boost competition & allow reasonable rate of power

Policy Change: Railways to be exempted from cross subsidy charge
Impact: Likely to bring down power procurement costs for the national transporter

Policy Change: Allows microgrids to feed in to central grids once they come into existence in remote areas
Impact:Incentivises & safeguards investment

Policy Change: Cost pass through for use of imported/e-auction coal and in cases of change in duties, levies, cess and taxes
Impact:To bring about clarity on pass through of charges. Likely to help avoid litigation

Policy Change: Hydro projects exempted from competitive bidding; long-term PPA tenure extended to 50 years from 35 years now
Impact:Govt. backtracks from introducing bidding in hydro projects; longer PPA to make hydro power cheaper

Policy Change: Tariff for a generating company selling at least 10% of capacity outside State to be determined by CERC
Impact: Provision clears ambiguity and brings clarity on adjudication of tariff-related issues for composite project

Policy Change: Inter-state Transmission to be developed through competitive bidding except for projects of strategic importance
Impact: Govt keeps option of awarding intra-state projects on nomination basis. This has been criticised by industry as it favours PSUs

Policy Change: Intra-State Transmission projects to be developed by State govt through competitive bidding
Impact:To increase competition in such transmission projects

Policy Change: Must for consumers to use smart meters; installation to be complete by 2019. Net meters for all roof top solar consumers
Impact:To reduce power losses & theft and allow improved energy accounting

 

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Modi government’s PAN rule on gold buying backfires, boosts unofficial gold trade
2RBI policy broadly in line with market expectation: Finance Ministry
3RBI sees economy growing at 7.4% in FY16; above World Bank projection