Print Friendly, PDF & Email

Why power costs vary, and uniform national rate is difficult to implement?

Topics covered:

  1. Infrastructure- Energy.

 

Why power costs vary, and uniform national rate is difficult to implement?

 

What to study?

For prelims and mains: How power tariffs are determined? Need for uniform national rate and challenges therein.

 

Context: Few lawmakers have suggested that power tariffs should be uniform across the country so that affordable power is available to all.

 

How do states decide power tariffs?

The electricity tariff paid by consumers in each state is directly reflective of the cost of power procurement by the power distribution companies (discoms) in the state.

There are state-specific factors for this.

 

Is the idea of having a flat countrywide rate feasible?

The State Electricity Regulatory Commissions (SERCs) decide on the power tariff after utilities file their cost of power with the regulators. Because power tariffs entail a number of state-specific factors, a uniform nationwide tariff is a proposition that would be difficult to implement.

 

Background:

  1. States such as Jharkhand or Odisha or Chhattisgarh, which have had coal-fired thermal capacity, would typically have lower tariffs because of the base-load capacities that they possess.
  2. States such as Himachal or Uttarakhand would have low tariffs because of hydropower capacities that are either fully or partially depreciated, and from which the home state, under the Ministry of Power’s Tariff Policy, gets access to 40 per cent of the power free of cost.
  3. A state like Gujarat, which has capacities based on imported coal, will have comparatively higher tariffs. States such as Delhi or Punjab, which buy power from outside to meet domestic requirements either through long-term power purchase agreements (PPAs) or spot power purchases at the power exchanges (PXs), have higher tariffs, as their power mix has high-cost power.

 

Sources: Indian Express.