Aperc's bid to move towards time-of-day power tariff

Having addressed basic issues arising out of power reforms under the new electricity Act, such as open access and separation of activities of generation, transmission and distribution, the Andhra Pradesh Electricity Regulatory Commission (APERC) has now started focusing on the issues related to retail tariffs.

The effort to move towards the time-of-day tariffs is one of the significant future initiatives that has found a mention in the commission's retail tariff order for the current financial year issued in March first week. According to the commission, the concept of time-of-day tariffs will have built-in incentives for off-peak consumption of power by various categories of consumers.

While refusing to accept the suggestion from industry players for incentives on off-peak power consumption, the commission in its order held that all the categories of consumers should get such incentive. "The commission does not deem it appropriate to provide such an incentive to a particular category of consumers. The commission is endeavouring to move towards the time-of-day tariffs and such tariffs will have the contemplated incentive built into this," the order said.

This differential tariffs depending on the peak and off-peak time-of-day are expected to alleviate peaking problems faced by Discoms to a certain extent as the new method encourages consumers to restructure their consumption pattern to benefit out of off-peak tariffs.

Even as the commission wanted to follow equity principle on the issue of off-peak incentives, it has, however, agreed to the contention of Discoms in regard to recent reduction of industrial tariffs while keeping domestic tariffs at the existing levels, showing enough flexibility in the given situation. The commission received objections to this 'dual standards' adopted by Discoms, saying that households consuming above 200 units a month now end up paying more than the industrial tariffs.

While the recent tariff reduction in certain HT categories made industries to draw power at below Rs 3 per unit, the households consuming electricity between 200 units and 300 units a month are paying Rs 4.75 per unit under the slab. Domestic consumption beyond 300 units a month will attract Rs 5.50 per unit under this slab.

The Discoms argued that the move to reduce industrial tariffs was essential to remain competitive under the present open access regime as there was a threat of high value consumers migrating to other sources who offer power at lower price.

With competitiveness of Discoms occupying the centrestage in determining tariffs, it is expected that future adjustments in retail tariffs would be broadly influenced by the private players who are entering the business of generation and distribution.