New Electricity Tariff System In India Offers Cost Savings Of Up To 20% For Consumers

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New Delhi, 26th June 2023: The Government of India is taking a significant step towards providing greater flexibility in electricity consumption and reducing costs for consumers. The Ministry of Power has announced two major changes to the existing power tariff system in the country, introducing the Time of Day (ToD) Tariff and enhancing smart metering provisions under the Electricity (Rights of Consumers) Rules, 2020.

The ToD Tariff system brings about a new approach to pricing electricity based on different times of the day. During solar hours, which comprise an eight-hour duration specified by the State Electricity Regulatory Commission, the tariff will be reduced by 10% to 20% compared to the normal rate. Conversely, the tariff during peak hours will be 10% to 20% higher. This revised tariff structure will initially apply to commercial and industrial consumers with a maximum demand of 10 KW and above starting from April 1, 2024. For all other consumers, excluding agricultural consumers, it will take effect from April 1, 2025.

Union Power and New and Renewable Energy Minister, RK Singh, emphasized the benefits of the ToD system for both consumers and the power system. The reduced tariff during solar hours reflects the lower cost of solar power, empowering consumers to strategically plan their electricity consumption and minimize their expenses. Moreover, the ToD mechanism will facilitate the integration of renewable energy sources into the power grid, contributing to India’s ongoing transition to sustainable energy.

Alongside the ToD Tariff, improvements have been made to smart metering provisions to enhance the consumer experience. Penalties for exceeding the maximum sanctioned load or demand have been reduced, and consumers will not be subjected to penal charges based on the maximum demand recorded by the smart meter before its installation.
The initial implementation of the Electricity (Rights of Consumers) Rules, 2020, by the government on December 31, 2020, aimed to ensure reliable and high-quality electricity services for consumers.

The current amendment to these rules further strengthens consumer empowerment by ensuring round-the-clock electricity supply at an affordable cost and fostering an environment conducive to investments in the power sector.


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