Power ministry drops tariff policy adherence after ERCs' cavil

Respective commissions will continue to frame tariff regulations

The Union ministry of power has dropped its proposal of making tariff mandatory in the amendment to the tariff policy after it was objected to by the electricity regulators.

The forum of regulators (FOR), a representative body of the electricity regulatory commissions (ERCs), had clearly told the ministry that it was a case of excessive delegation and arrogates to the central government powers that override even the provisions of the Electricity Act, 2003.

Now the ministry has softened its stand with regard to the mandatory adherence to tariff policy keeping in view India’s federal structure. SERCs are free to determine tariff as per their regulations provided they give reasons for departing from the national tariff policy.

FOR member, who did not want to be quoted, told Business Standard'' FOR felt that the existing provision of the Electricity Act, providing that the Central Commission and State Commissions, shall be "guided by" the National Electricity Policy, the National Electricity Plan and the Tariff Policy, is adequate and in line with the spirit of distancing Government and extending desired flexibility and freedom to the Electricity Regulators in discharge of its statutory functions. These provisions, therefore, the Forum felt, do not require any change.''

Former chairman of FOR and the Central Electricity Regulatory Commission Pramod Deo supported FOR's views. He said,''Historically, when the Central Government first came out with a very detailed prescriptive tariff policy all the regulatory commissions had opposed such heavy handed approach. Subsequently, that document was amended to lay down broad principles and it was the responsibility of respective commissions to frame tariff regulations. SERCs are free to determine tariff as per their regulations provided they give reasons for departing from the national tariff policy.''



Deo also referred to the observations made by the Parliamentary Standing Committee on the guiding nature of tariff policy. The committee had said that Appropriate Commission shall necessarily be guided by the Tariff Policy. Further, the committee recommended that the Tariff Policy should be framed in such a manner that it is in consonance with the provisions of the Electricity Act and also provide due and desired autonomy to the States within its ambit.



Maharashtra Electricity Regulatory Commission's former chairman VP Raja said that the electricity is a concurrent subject and making tariff policy mandatory is not proper. ''The National Tariff Policy is in the form subordinate legislation and thereby making tariff policy mandatory is not permitted in the federal structure of the Constitution of India. Besides, the conflict may arise between state and the Centre and therefore it is also not legally proper,'' he noted.

Meanwhile, FOR has supported the power ministry's proposal on Renewable Generation Obligation (RGO) to ensure green energy for lesser emissions, and reduced dependence on fossil fuels and hence reduced imports of coal and gas. FOR that bundling of the renewable energy with thermal generation for the purpose of tariff determination should be stipulated for payment purposes and not for scheduling of power generated from the respective sources of generation. The responsibility of monitoring compliance of RGO should be with the Appropriate Commission.