Consumers to Pay 20% Lower Electricity Tariff During Solar Hours

The MoP has introduced the concept of ToD tariffs to promote efficient energy usage


The Ministry of Power, in a recent amendment to the Electricity (Rights of Consumers) Rules, 2020, has directed state commissions to ensure the tariff for solar hours (the duration of eight hours in a day)  must be at least 20% lower than the normal tariff for all consumer categories (except agricultural consumers).

The Ministry amended the rules to introduce provisions for Time-of-Day (ToD) tariffs and regulations around smart and prepaid meter usage for consumers.

The amended rules came into effect on June 14, 2023.

The Ministry has introduced the concept of ToD tariffs to promote efficient energy usage. The ToD tariff refers to the differentiated tariffs for peak and non-peak hours in a day.

Commercial and industrial consumers with higher consumption tend to affect the grid stability during peak hours. The new ToD tariffs are expected to play a crucial role in encouraging the C&I segment to shift their demand to non-peak hours with cheaper electricity rates compared to peak hours when it would be more expensive.

Under the new rule, state commissions are responsible for determining the ToD tariffs. The newly amended rule 8A of the Electricity (Rights of Consumers) Rules, 2020, specifies that ToD tariffs for commercial and industrial consumers with a maximum demand exceeding 10 kW will be effective no later than April 1, 2024.

For other consumers, excluding agricultural consumers, the ToD tariffs will be implemented by April 1, 2025. Consumers with smart meters will have ToD tariffs immediately after installation.

During peak periods, the tariff for commercial and industrial consumers must be at least 1.20 times the normal tariff, while for other consumers, it should be at least 1.10 times the normal tariff.

It is important to note that the ToD tariff will apply to the energy charge component of the standard tariff.

Union Power and New & Renewable Energy Minister Shri R. K. Singh said that the ToD is a win-win for consumers as well as the power system. “The TOD tariffs comprising separate tariffs for peak hours, Solar hours and normal hours, send price signals to consumers to manage their load according to the Tariff. With awareness and effective utilization of ToD tariff mechanism, consumers can reduce their electricity bills. Since solar power is cheaper, the tariff during the solar hours will be less, so the consumer benefits. During non solar hours thermal and hydro power as well as gas based capacity is used – their costs are higher than that of solar power – this will be reflected in Time of Day Tariff. Now consumers can plan their consumption in order to reduce their power costs – planning more activities during solar hours when power costs are less.”

Singh affirmed that the ToD mechanism would ensure better grid integration of Renewable Energy sources, facilitating faster energy transition for India. It would also improve the management of renewable generation fluctuations, and incentivize demand increase during periods of high RE generation hours, thereby increasing grid integration of larger quantities of renewable power.

The amendments also introduce Rule 8B, emphasizing tariff information display.

Distribution licensees must prominently display the tariffs for each consumer category on their websites. Consumers must be notified of any tariff changes, excluding fuel surcharge and other charges, at least one month in advance. This information will be communicated through distribution licensee’s websites, energy bills, SMS, mobile applications, and similar mediums.

Smart and Prepaid Meters

One key change outlined in Rule 5 of the Electricity (Rights of Consumers) Rules, 2020, under the new sub-rule (5), is that all types of smart meters must be remotely read at least once daily.

In addition, other pre-payment meters should be read by an authorized representative of the distribution licensee every three months.

Consumers will have access to their energy consumption data through various channels such as websites, mobile applications, and SMS. Furthermore, consumers with smart pre-payment meters can check their daily consumption and balance amounts.

The amendments also address the issue of penalties based on the maximum demand recorded by smart meters. As per the newly introduced sub-rule (5A), consumers will not face penalties for the period before installing smart meters. Moreover, if the recorded maximum demand exceeds the sanctioned load in each month, the bill calculation for that billing cycle will be based on the actual recorded maximum demand. Consumers will be informed of this change through SMS or mobile applications.

The new amendments aim to enhance consumer rights and improve the efficiency of electricity consumption using smart meters and innovative ToD tariff structures.

In January, Union Minister of Power and New and Renewable Energy R.K. Singh advised states to ensure no penalty is levied on any consumer for higher load discovered after installing prepaid smart meters.

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The article is updated with Union Power Minister R.K. Singh’s quote on the ToD tariff implementation, released on June 23, 2023