New Delhi: The Ministry of Power is seeking to introduce automatic monthly revision of electricity rates by amending the Electricity Regulations 2005 to achieve a key objective of the Electricity (Amendment) Bill 2022. ParliamentStanding Committee on Energy.
One of the major objectives of the bill is to ensure recovery of “all prudential costs” of electricity from consumers to improve the financial health of distribution companies (discoms). In other words, the ministry wants the tariffs to reflect the full cost, including the effect of variation in fuel prices of power purchased by discoms.
Since the passage of the Bill has been delayed, the Ministry is trying to achieve this objective by changing the existing regulations for “timely recovery of power purchase cost by the distribution licensee”.
“The Appropriate Commission shall, within 90 days of the publication of these rules, specify a price adjustment formula for recovery of costs arising on account of variation in the price of fuel or purchase cost. The cost (of electricity) on account of such variation The effect will automatically be passed on to the consumer charges on monthly basis using the formula,” states the Draft Electricity Regulations 2022.
“Section 176 of the Electricity Act 2003 empowers the Center to make rules for this sector. As the amendment bill is getting delayed, the Center is changing the rules under the existing Act to implement this anti-people provision. All India Power Engineers Federation President Shailendra Dubey Told.
The draft amendment to the regulations was circulated among states, regulators, industry bodies and other stakeholders on Friday for their comments till September 11.
Frequent and inadequate tariff revisions, driven by political justifications of not bothering voters, leave a gap between the cost of power purchase and supply. But this is only one reason for the discoms continuing to suffer losses.
Discoms are the weakest link in India’s power sector. The poor financial condition of the discoms affects their ability to make timely payments to the production companies, with the total dues currently at Rs 1.14 lakh crore.