Union Power Minister R K Singh on Friday said that new amendments to electricity rules in India will result in lower power tariffs by 20 per cent during solar hours while higher tariffs by 20 per cent during peak hours. The statement comes after the government earlier notified the amendments in the Electricity (Rights of Consumers) Rules and brought in a host of changes concerning smart meters and time-of-day tariffs.
Time-of-day tariffs (ToD) tariffs refer to differentiated tariffs for peak and non-peak hours in a day. According to reports, the government has issued a directive to state power regulators, instructing them to guarantee that tariffs during designated solar hours are at least 20 per cent lower than the standard tariffs for all customer categories (excluding agricultural connections). Solar hours are defined as a period of eight hours during the day, as specified by the respective state electricity commissions.
According to the Reuters report on Friday, the move is aimed at increasing the use of renewable energy. The amendments will come into effect from April 2025 for all consumers except agricultural.
“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,” Power Minister R K Singh said in a statement, as per the report.
The amendments have been introduced under the ongoing national smart meter mission, which aims to install millions of prepaid smart meters in households and other consumer segments to improve energy accounting. The objective of ToD tariffs is to encourage the electricity-intensive commercial and industrial (C&I) sectors to shift their demand to non-peak hours, making the tariffs more affordable for them. With ToD, higher tariffs are applied during peak hours, while lower tariffs are implemented during off-peak hours.
The Electricity (Rights of Consumers) Amendment Rules, 2023, mention that the time of day (ToD) tariff specified by the state commission for commercial and industrial consumers during peak hours of the day shall not be less than 1.2 times the normal tariff and for other consumers, it shall not be less than 1.1 times the normal tariff.
"The tariff for each category of consumers shall be displayed on distribution licensee's website and consumers shall be notified of change in tariff excluding fuel surcharge and other charges, at least one month ahead of time," the gazette notification states.
The decision of the government to collect 1.2 times more than the normal power tariff during peak hours had previously came in for criticism from several quarters, with the Telangana government calling the move "anti-poor".