Scope for progressive tariff in power sector

Scope for progressive tariff in power sector

To ensure the poor are not unduly burdened by excessive power tariff, discoms could consider progressivity in fixing tariffs while also making them simple and transparent, the Economic Survey has said.

Progressivity, a method through which rate is fixed proportionate to the increase in consumption, would indeed ensure no one is made to bear the burden.

To reduce burden on poor
"Progressivity in tariff rates is to reduce burden on the poor without unduly burdening the rich. India's domestic power tariff schedules have greater scope for progressivity," the Economic Survey tabled in Parliament on Friday said.

Those with high power consumption would subsidise rates for those consuming low, allowing cross-subsidisation to take place within the residential consumers, it pointed out.

On progressivity in tariff, the Survey said: "States and their regulators will have a key role to play with helpful facilitation from the Centre. The power sector is a perfect crucible for making effective co-operative competitive federalism experiment, that is now India."
The Survey suggested that  industry can use excess power generation capacity through open access to push for Make in India.

Under the Electricity Act 2003, Open Access (OA) policy allows consumers above 1 MW electricity load to procure power directly from the market. States are said to have placed significant curbs on the policy.

Noting that the power sector has made significant strides in the last two years through record generation and reform of discoms, the Survey said the new paradigm of power surplus would set the stage for continuing reforms introduced by the government  for the past two years.

Reforms would make India ‘one market’ in power and ease burden on industry to make them internationally competitive as envisaged by Make in India, the Survey further added.

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