Draft Note on new tariff policy to be finalised in January itself

Thursday, 08 January 2015 10:19 Suresh Kumar MG

Tariff PolicyAiming to bring another set of reforms in the sector, the Power Ministry is drafting a Cabinet note proposing amendments to the tariff policy for enabling greater competition in the sector. The draft Cabinet note is likely to be finalised by next week.

According to sources, the Cabinet note proposing certain amendments to the tariff policy, which was incorporated in 2006, is under preparation and the Ministry of Power will be ready with a draft by January 15.

The amendments are being proposed mainly with the purpose of giving emphasis to competition and creating feasible conditions for the same in the sector.

After receiving responses from other concerned ministries on the draft note, the Power Ministry will send the final note to Cabinet for approval.

Sources said as part of the amendment to the tariff policy, the ministry has sought extension of Section 62 - under which electricity regulatory commissions have been empowered to determine tariffs - beyond the financial year 2017 and keep the hydro projects under this section, enabling the continuation of the cost plus tariff structure.

Under the cost-plus tariff structure, PSUs like NTPC and NHPC charge cost-plus tariff - a lump sum fee as well as a per-unit charge from the distribution companies.

Another suggestion is to have a formula which would ensure that variation in fuel and power purchase cost is recovered by the power generating firms.

The earlier amendment to the tariff policy was approved in 2011.

The stakeholders which are believed to have submitted their feedback on the same include Central Electricity Authority (CEA), Central Electricity Regulatory Commission (CERC), principal secretaries of all the state governments, and chairpersons of power generation, transmission and distribution utilities.

Source- NDTV