NDA Govt Cabinet Approves Power Tariff Policy Wednesday January 20,2016

The Union Cabinet has approved several amendments to the national power tariff policy with a view to promote renewable energy and improve the ease of doing business for developers in the sector.

In a major shift, power companies are allowed to pass costs on to consumers arising out of any changes in taxes, cesses and levies levied on them.

The policy also seeks to “create a win-win between the generator, utilities and consumers” by allowing power generators to sell their surplus power on the power exchange and sharing the proceeds with the state government.

The amendments are based on four Es—

• electricity for all
• efficiency that will ensure affordable tariffs
• the environment and 
• ease of doing business to attract greater investment in the sector

Piyush Goyal, Minister of State for Power, Coal and New & Renewable Energy, said in a briefing on the cabinet’s decision on Tuesday January 19,2016 

In 2006, the central government had approved the National Tariff Policy under the provisions of Electricity Act, 2003. Indicating that the policy will focus on clean energy, power minister Piyush Goyal had recently said: “Now that we have a challenge to add 1.75 lakh MW of renewable energy, we are also bringing in certain more elements in tariff policy which will promote renewable energy.”
The minister had also said: “We are brining in elements which will promote Swachh Bharat Abhiyan and help waste-to-energy prosper in India. There are certain new elements we decided to bring in.” It will also promote Swachh Bharat initiative. Under the policy, the power plants will have to use processed municipal waste water available in their vicinity (in 100km radius). The proposed policy will bring in several unique aspects which have not been touched in the past. It will allow distribution companies to buy any amount of power produced from the waste.

The amended tariff policy also imposes a renewable energy obligation on new coal or lignite-based thermal plants, requiring them to establish or purchase renewable capacity alongside their own generation units. 

The new policy also mandates that no inter-state transmission charges will be levied until a time to be specified by the government.  

Further, the tariffs for multi-state power projects will be determined by the Central Electricity Regulatory Commission, thereby removing a major point of uncertainty to do with such projects

The amended policy also said that the power regulator has to come up with a clear action plan to ensure 24x7 power supply to all consumers by 2021-22 or earlier. 

Towards the power for all initiative, the policy enables the creation of micro-grids in remote villages as yet unconnected to the grid, and also says that these micro-grids can sell their surplus power to the grid when it reaches those areas