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Key takeaways from new power tariff policy

21 January, 2016

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has cleared the amendments in the power tariff policy with a view to promote renewable energy and improve the ease of doing business for power producers in the country.

The policy, which was under revision since 2011, now has around 30 major and a few minor amendments, which are aimed at ensuring uninterrupted supply to all consumers by 2021-22.

As per the new policy, the power regulator has to draw a clear action plan to ensure 24×7 power supply to all consumers by 2021-22 or earlier.

“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 and Ease of doing business to attract investments and ensure financial viability,” Minister of State with Independent Charge for Power, Coal, New and Renewable Energy Piyush Goyal said after the cabinet meeting.

In 2006, the central government had approved the National Tariff Policy under the provisions of Electricity Act, 2003.

Highlights of amendments:

  • Amendments aims to ensure uninterrupted 24×7 power supply to all by 2021-22
  • Microgrids for remote villages and small power plants near coal washeries
  • Reduce power cost to consumers through expansion of existing power plants
  • No inter-state transmission charges and losses to be levied for solar and wind power
  • Allows sale of un-requisitioned power in the spot market
  • Transmission projects to be developed through competitive bidding process to ensure faster completion at lower cost
  • Mandatory minimum purchase for clean energy
  • Allows cost pass-through for use of imported and e-auctioned coal
  • All new inter-state transmission projects through competitive bidding
  • Smart meters compulsory for consumption over 200 units
  • Promotion of hydro projects through long-term PPAs and exemption from competitive bidding till August 2022
  • Allows pass through for impact of any change in domestic duties, levies, cess and taxes in competitive bid projects
  • Central regulator to determine tariff for composite schemes where more than 10 per cent power sold outside state

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Key takeaways from new power tariff policy

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