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The Cabinet on Wednesday allowed amendments to the national tariff policy that provide for differential power prices in a day, allow companies to pass on change in domestic taxes to consumers and expand generation capacity by 100%. "The new amendments will allow consumers to become producers of electricity," power minister Piyush Goyal told reporters.
The amended policy mandates consumers to use smart meters that will interaction with distribution companies and save money by switching off appliances during peak hours and use them in non-peak hours. Meters will help curb power thefts, enable net metering and improve accounting.
The target date for installation of meters for consumers with consumption of over 500 units per month is December 2017, while that for consumers with consumption of 200-500 units per month is December 2019. The amendments allow companies to pass on to consumers the impact of any change in domestic duties, levies, cess and taxes and also charge them for costlier coal procured by power generators.
Ashok Khurana, director-general of the Association of Power Producers, said the framework, as proposed by the amendments to the tariff policy, will be positive for the sector. He said automatic pass-through of changes in duties, levies and cess will remove uncertainty for power projects. Allowing cost pass through for imported coal and spot market will help in reducing litigations, as cases pertaining to the above issues are pending before appropriate commissions.
As per the amendments, brownfield capacity addition of up to 100% would optimise land usage, support infrastructure and help cut down costs, he said, adding that many positive features have been introduced for encouragement of renewables.
Goyal said electricity regulators and state governments will devise a trajectory to achieve 24x7 power supply. Power transmission projects will be developed through competitive bidding process to ensure faster completion at lower cost. Also, no interstate transmission charges and losses will be levied on solar and wind power, he said. However, hydroelectric projects have been exempted from participating in competitive bidding till August 2022 for signing power purchase agreements.
The amendments allow monthly and quarterly tariff revisions by power plants. Companies will be allowed to sell idle power generation capacity in power exchanges and the profits can be shared between the firms and distribution utilities.
"These amendments will ensure availability of electricity to consumers at reasonable and competitive rates, improve ease of doing business to ensure financial viability of the sector, attract investments, and promote transparency, consistency and predictability in regulatory approaches across jurisdictions. It will further facilitate competition, efficiency in operations and improvement in quality of supply of electricity," an official statement said.
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