Ministry of Power Proposes Adoption of Uniform Tariff Structure for All States

New tariff structure proposed to be based on slabs in sanctioned load and units consumed


The Ministry of Power has issued a proposal incorporating new modifications to the revised proposal for amendments to the Electricity Act 2003.

In September 2018, the Ministry of Power had issued revised proposal for amendments to the Electricity Act 2003, in which it had included ample provisions for renewable energy generation and distribution. The new modifications are related to simplification of tariff categories and rationalization of retail tariff.

Through these modifications, the Ministry of power proposes incorporating tariff categories on sanctioned load and consumption basis.

In the proposal, the government has introduced many novel features like adoption of a uniform tariff structure across all states and consumer categories. It has also recommended imposition of penalty for exceeding the approved load in any given month.

The new proposal is open for comments up to November 5, 2018.

Key Points Proposed

  • Tariff structure must do away with the concept of different tariff for different customer categories.
  • The price of electricity consumed must be based on load used and energy consumed.
  • The principle to be adopted in new tariff structure will be based on slabs in sanctioned load and units consumed.
  • A maximum of five load categories will be created; 0-2 kW, >2 kW-5 kW, >5 kW-10 kW, >10 kW-25 kW and >25 kW.
  • For load bracket of 0-2 kW energy consumption slab of 0-200 units will be considered, for >2 kW-5 kW, energy consumption slab of 201-400 units; for >5 kW-10 kW, energy consumption slab of 401-800 units; for >10 kW-25 kW, energy consumption slab of 801-1200 units and for >25 kW energy consumption slab of >1200 units will be considered.
  • As consumption pattern is different in different states, the slab and bracket range for load and energy consumption will be decided by state electricity regulatory commission (SERC).
  • Subsidy and cross-subsidy will be handled through different slabs in load and energy consumed. Consumers of lower slabs and brackets will be subsidized by consumers of higher slabs and brackets.
  • A systematic method must be adopted to automatically revise load if the average load in previous year exceeds the approved load. This will prevent customers from declaring less load.
  • A penalty has been proposed to be imposed for exceeding the approved load in any given month.
  • States will have option of adopting kW and kWh or kV and kVAh based tariff. For above 10 kW load level, the Ministry is of the opinion that it would be preferable to have kVA and kVAh as the units.
  • SERCs can create special tariff category for electric vehicle (EV) charging stations.

The Ministry of Power believes that tariff structures across states in India have become very complex and there is a need to simplify, harmonize and rationalize the tariff structure across states. The question of tariff for EV charging stations has been taken care of in the proposed new modifications, this is expected to usher in EV adoption across India.

Prior to this, Ministry of Power had issued draft amendments to Tariff Policy 2016 keeping in view the changes and dynamic nature of the power sector.

When contacted, an official with the Ministry of Power said, “We are focused on removing the complexities of Electricity Act and Tariff Policy. It is paramount for 24*7 power to all, by ensuring smart governance and providing access to affordable electricity for all households.”

“Power demand is now going to amplify due to the efforts for electrification. Not all users even in a city utilize the same amount of energy, the consumption levels are varied, and we have tried to make our policy simple by focusing it around consumption of individual consumers. Earlier, consumers were widely classified into domestic, industrial, institutional, agricultural and commercial, due to this the benefit of low cost of power could not be provided to the one’s in need. Now we will be able to do so,” added the official.