Moderation in power tariffs to boost Indian Economy

Over the past three years, to reduce cost of electricity to consumers and make sure no Indian languishes in the dark.

A flagship Mission of the Government is to realise the Hon’ble Prime Minister Shri Narendra Modi’s vision of 24x7 Affordable “Power for all” in an environment-friendly manner.

While considerable progress has been made in expanding renewable energy installation as well as lighting lamps in the remotest corners of the country, it is heartening to note that now power is also becoming increasingly affordable. The fall in prices is the result of joint efforts by Government of India and ambitious State governments, based on the principle of cooperative federalism.

An example of this is the drop in electricity prices in Chandigarh - recently, power in Chandigarh got cheaper by 18%, as the UTs electricity department slashed the FPPCA (Fuel and Power purchase cost adjustment) charge for both domestic as well as commercial consumers.

Regular tariff in domestic category reduced:

For the domestic category, the regular tariff has been reduced to 65p from 80p for 0-150 units, Rs. 1.21 from Rs. 1.48 for 151-400 units, Rs. 1.28 from Rs. 1.56 for more than 400 units.

Coming to the commercial category, the FPPCA charges have been reduced to Rs. 1.24 from Rs. 1.51 for 0-150 units and Rs. 1.38 from Rs. 1.68. for 151-400 units.

Similarly, in states like Arunachal Pradesh, Gujarat, Haryana, Jharkhand and Rajasthan, there has been no increase in tariff for FY 2016-17 and FY 2017-18. Taking a cue from the above States, others too can cooperate with Government of India to make electricity cheap for all Indians.

Holistic improvements:

Over the past three years, to reduce cost of electricity to consumers and make sure no Indian languishes in the dark, the Government has focused on holistic and long-term structural improvements at each step of the power value chain.

The improvement starts from the very first step, coal, of the value chain. The story of coal can be succinctly described as - shortage to surplus, surplus to superior. Prior to 2014, the coal sector was plagued with scams leading to a massive loss of resources and productivity.

However, true to public's expectations, the Government has institutionalised the method of auctioning coal blocks, which has resulted in massive revenue to States. Similarly, in May 2014 two-third power plants suffered from critical coal shortage, now there is no shortage.

SHAKTI:

This month the Government launched SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India), a transformative policy for auction and allotment of coal linkage, leading to easier access to coal and more affordable power.

Through superior coal, the Government has ensured lower cost of electricity - In 2016-17, 0.63 kgs of coal used to produce 1 kWh of electricity versus 0.69 kgs in 2013-2014. Thus, a unit of electricity is now generated from 8% lesser coal compared to three years back.

The nation can be proud that, in the past 3 years, we have leapfrogged chronic power deficit to become power surplus. There has been about 60 GW capacity addition in conventional power, which is the highest ever for a period of 3 years. Gone are the days of grid failure, such as the one in 2012, when tens of crores of Indians in north and eastern parts of the country were without power for nearly 2 days. Instead, power is now available to States at one-third or lesser price as compared to 2011-12 and can be viewed on Vidyut Pravah dashboard.

Protecting the environment:

For the first time ever, net capacity addition of renewable power (approx. 11 GW) in 2016-17 has exceeded net addition of conventional power (approx 10.3 GW). Another major institutional reform, the shift from fixed tariff to competitive bidding, has ensured record-low prices this year in both solar (Rs. 2.44/unit) and wind sector (Rs. 3.46/unit).

In this way, the Government is ensuring that the environment is protected and at the same time the poor get affordable power. Competitive Bidding is also the bedrock of The Mega Power Policy facilitates for future Power Purchase Agreements (PPAs) and ensures long-term project viability.

Record set:

The government has set a record of the highest ever increases in transmission capacity for transmitting affordable power to consumers. There was about 40% increase in transformation capacity from 5.3 lakh MVA in March 2014 to 7.4 lakh MVA in March 2017.

Additionally, there has been a 116% increase in available transfer capability to South India from March 2014. Thus, truly transforming transmission in India and achieving the target of 'One Nation, One Grid, One Price' through reforms, unbundling of the utilities, improved inter-state transmission capability, etc. Moreover, in order to boost energy efficiency, the Government has launched the World's largest LED distribution programme to realise huge savings in power bills for consumers. So far over 23 cr. LED bulbs have been distributed under UJALA, resulting in consumer saving about Rs. 12,000 crores per year.

Scheme to help farmers:

Another scheme called National Energy Efficient Agriculture Pumps Programme launched to help farmers replace age-old energy guzzlers agricultural pumps with new-age energy efficient 5-star rating agricultural pumps.

The distribution sector - hitherto an impediment - has been turned around through Ujwal DISCOM Assurance Yojana (UDAY), the most comprehensive power sector reform ever.

UDAY is based on a philosophy to bring a permanent resolution of past, present and future DISCOM issues through financial and operational efficiency improvements. The savings of nearly Rs.12,000 cr. to DISCOMs due to less rate of interest are already translating into substantially lower electricity prices for consumers.

Through the above initiatives, the growth of electricity prices in the Government two years is 3.27% versus 5.94% in 2004-2014 (UPA tenure). This clearly reflects the moderation in tariff providing relief to the end consumer.

Strengthening the power sector:

Lack of access to power not only undermines health but also inhibits education, limits livelihood opportunities and income generation ability, and reduces the overall chances for the poor to rise out of poverty.

In light of this, the Government is focused on strengthening all aspects of the power sector and is leaving no stone unturned to fulfill its solemn commitment to the people of India especially to the poor left without power for so long, and realise the Prime Minister's vision of an 'Ujwal Bharat'.

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