Ever since it came to power in February 2015. By adjusting subsidy amounts and maintaining strict vigil on the regulatory watchdog, Delhi Electricity Regulatory Commission (DERC), the government has successfully managed to keep tariff low for those who consume power up to 400 units.
High-end consumers and commercial and industrial consumers, on the other hand, have to cope with high fixed charges as well as higher energy charges. The proposed amendments in Electricity Act are set to change all that. With parliamentary elections just a few months away, this can become a poll issue.
Power sector experts say the national tariff policy has been stressing on doing away with cross-subsidy since 2007. “Cross-subsidy was supposed to be phased out by 2012 because it was felt that high-end domestic, commercial and industrial consumers should not be made to subsidise others. There should be a uniform tariff, and any benefits extended to any category of consumers should be at the state government’s expense,’’ said an expert, speaking on the condition of anonymity.
Modi government pushing for rationalisation of power tariffs
Worldwide, the practice of cross-subsidy has been more or less done away with. “Most countries follow a simple policy of ‘you pay for what you consume’. A separate tariff is kept for low-end and underprivileged consumers but the cost is borne by their respective governments,’’ said another expert. Many were also of the view that the underprivileged category of consumers in Delhi were only in the 0-200 units bracket and all subsidy benefits could be contained there.
Functioning and appointment of members and chairman of DERC has also been a huge bone of contention. “DERC is a quasi judicial, independent body and any interference from either the state or central government renders it ineffective.
A simple solution to remove any interference from any government in DERC’s functioning would be to do away with a clause that talks about giving advice to the commission,’’ said one of the experts.
Rationalisation of power tariff was discussed at the state power ministers’ conference in May last year. The idea is to have about 15 uniform slabs across the country in place of the highly complex system prevalent in states. In Tamil Nadu, for example, there are 36 slabs while Andhra Pradesh has 93. The proposed 15 slabs will have five major classes of consumers — domestic, commercial, agricultural, industrial and institutional — with sub-classes based on voltage and consumption.
This system is expected to enable providing benefits for “low/efficient consumption and discourage high/wasteful consumption” besides protecting the interests of certain consumers having low-paying capacity,” the state power ministers' agenda had said.
The DERC had floated the idea of tariff rationalisation in an approach paper in February with the aim of increasing competition in the electricity supply market and giving consumers an option to choose their power supplier.