NEW DELHI: The power ministry is seeking to implement automatic monthly revision in electricity tariffs by changing the Electricity Regulations 2005 to achieve a key objective of the Electricity (Amendment) Bill 2022 that is stuck in Parliament’s standing committee on energy.
One of the key objectives of the bill is to ensure recovery of “all prudent costs” of electricity from consumers to improve the financial health of the distribution companies (discoms). In other words, the ministry wants tariffs to reflect the full cost, including the impact of variation in fuel prices, of power procured by discoms.
Since the passage of the bill has been delayed, the ministry is trying to achieve this objective by changing the existing Regulations for “timely recovery of power purchase cost by distribution licensee”.
“The appropriate commission shall, within 90 days of publication of these rules, specify a price adjustment formula for recovery of costs arising on account of variations in fuel price or purchase cost. The impact in the cost (of power) due to such variation shall be automatically passed through in the consumer tariff on a monthly basis using the formula,” says the draft Electricity Regulations 2022.
“Section 176 of the Electricity Act 2003 gives the Centre powers to frame rules for the sector. Since the amendment bill is delayed, the Centre is changing the regulations to implement this anti-people provision under the existing Act,” All India Power Engineers Federation chairman Shailendra Dubey said.
The draft amendments to the regulations was circulated among states, regulators, industry bodies and other stakeholders on Friday for their comments by September 11.
Infrequent and inadequate tariff revision, driven by political expediency of not upsetting the voters, leave a gap between cost of power procurement and supply. But this is only one of the factors for continued discom losses.
Discoms are the weakest link in India’s power sector. The poor financials of discoms affect their capacity to pay generation companies on time, with total overdue amount pegged at Rs 1.14 lakh crore at present.