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New power tariff policy to boost investment, clean energy: Government

India TV News Desk 20 Jan 2016, 22:44:48 IST
India TV News Desk

New Delhi: In an overhaul aimed at ensuring round-the-clock availability of electricity and promoting clean energy, the government today unveiled a new power tariff policy.

As per the reforms carried out by the government, taxes and levies affecting power generation cost can now be passed on to consumers. The policy also permits producers to sell spare capacity via exchanges.

The new Tariff Policy, approved by the Cabinet headed by Prime Minister Narendra Modi, also allowed 100 per cent expansion by existing power plants and mandating states to buy all power generated from waste.

Power Minister Piyush Goyal said the reform will help meet the objective of making electricity available to all,reduce litigation, revive investments and protect environment.

"A holistic view of the power sector has been taken and comprehensive amendments have been made in the Tariff policy 2006. Our aim is to achieve the objectives of Ujwal DISCOM Assurance Yojana (UDAY) with the focus on 4 Es: Electricity for all, Efficiency to ensure affordable tariffs, Environment for a sustainable future, Ease of doing business to attract investments and ensure financial viability," he said.

With loss-making state electricity distribution companies not buying all of the power, the generators are running plants below capacity.

Under the new plan, the profit made by power generators by selling spare electricity via exchanges will be split between them and the state discoms.

Also, discoms will have to raise share of renewable energy. They will have to buy all of the power produced from waste in their state, he said.

He said the policy is aiming at round the clock supply to all consumers, and state governments and regulators will devise a power supply trajectory to achieve this.

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Under this, power to be provided to remote unconnected villages through micro grids with provision for purchase of power into the grid as and when the grid reaches there.

Goyal said: "Small plants will be set up in coal mining areas to provide power to people living near coal mines."

An official statement said that affordable power will be provided to people living near coal mines by enabling procurement of power from coal washery reject based plants.
 
Under the second E (efficiency), Goyal said that 100 per cent expansion of existing plants will be allowed because it is always easy to go for brown field expansion as these already have clearance like environment and forest approvals.

Government expects that this will also help in reducing power cost to consumers through expanding existing plants.

The minister also said, "States do not buy (committed) power from plants. There is spare capacity. Now plants will be able to sell power generated from this spare capacity on energy exchanges."

Power plants run on low PLF or generate less power than their installed capacity because state do not buy the committed power. This results in underutilisation of plant capacity which increases fixed cost component in the power tariff.

The minister also said, "Except few lines like on India-Bangladesh border, all transmission lines will be auctioned through competitive bidding."

Government expects that development of transmission projects through competitive bidding process will ensure faster completion of lines at lower cost.

According to the statement, the new tariff policy also provides for faster installation of smart meters to enable Time of Day metering, reducing theft and allowing net-metering.

It also aims at lowering power cost by creating transmission capacity for accessing power from across India.

(With PTI inputs)