The Union Ministry of Power has proposed a cap on transmission charges levied by the state governments on industrial and commercial customers. The proposal has been put forward through an order, circulated seeking comments from stakeholders. The cap shall be available on power generated through renewable energy resources.
Jun 28, 2023
The Union Ministry of Power, India, has circulated an order proposing a cap on transmission charges applicable to industrial and commercial consumers by states for the purchase of power generated through renewable energy sources. The order seeks comments from stakeholders while proposing an outer limit on network access charges and charges levied for industry use of the state network. Elimination of the requirement for large renewable energy plants to obtain a transmission license for dedicated lines is also proposed.
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The power tariffs for industrial consumers in India are used to cross-subsidize agricultural and retail tariffs. The cost increases further due to state charges like network access charges, wheeling charges, a fee for using the state transmission network, additional surcharges, and cross-subsidy charges to protect agricultural consumers.
The move will help boost renewable energy consumption and investments. However, the order is expected to face resistance from state governments as they are set to lose revenue of billions on implementation of the order. They levy charges on high and prompt-paying industrial and commercial consumers, to dissuade them from buying power from sources other than licensed retail companies.
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Meanwhile, industrial and commercial consumers across the country have regularly complained about high electricity costs due to various transmission charges levied on them. In Delhi, surcharges worth INR 4.5 per unit of electricity are charged from the industries for electricity bought at INR 3 per unit from a plant in central India.
