E-Paper
Centre seeks mechanism to reduce tariff for pre-paid power
In what appears to be a conscious bid to encourage power consumers to go for pre-payment mode to enhance cash-strapped discoms’ working capital, the centre has asked
In what appears to be a conscious bid to encourage power consumers to go for pre-payment mode to enhance cash-strapped discoms’ working capital, the centre has asked regulators to develop a mechanism to reduce the tariff for electricity that a consumer pays for in advance.
They have been asked to put in place a similar tariff determination mechanism for the bulk power a discom pays to a generating or transmission company beforehand.
In a letter issued last week, the Union power ministry has asked to the electricity regulatory commissions to take suitable action in this regard though no time limit has been set for it.
“An action taken report (ATR) regarding it may be submitted to the Forum of Regulators (FOR). FOR secretariat is requested to send the monthly ATR to this ministry,” says the letter.
“This move aims to see to it that all consumers make advance payments by opting for prepaid meters and the distribution companies also, in turn, pay in advance to generation and transmission companies with the regulators ordering some rebate to all such consumers who pay in advance,” a senior official in the UP Electricity Regulatory Commission (UPERC) here pointed out.
The proposed system, he said, had the potential of further lowering the retail tariff as the benefits that accrue to the discoms and generation as well transmission companies due to prepayment /advance mechanism would be passed by the regulators to end consumers.
The system of pre or advance payment already exists for consumers in most states, including UP. And the power ministry, by an order on June 28, made this system applicable to discoms also by mandating them to open and maintaining adequate Letter of Credit (LC) as payment security mechanism under power purchase agreement (PPA) by distribution licencee.
As per this order effective since August 1, power shall be scheduled for dispatched only after it has been intimated by the generating company that the LC for the desired power has been opened.
“The present system of rebate in case of timely payment does not fully compensate against the reduced requirement of working capital, the ministry said in the letter.
“As per the discussion held in the recently held power ministers’ conference during October 11 and 12 in Gujarat, this was discussed and decided that.
