The new power policy of the Modi Government is governed by the Electricity Act that has been under revision and had a lot of back and forth travel at various levels for more than five years now. It has nearly 30 major amendments and a few minor ones, aimed at ensuring uninterrupted supply to all consumers in the next five years.
To reduce transmission costs, pilferage and rates for the end users, the policy suggests several measures, including microgrids for remote villages and small power plants near coal washeries and other such places in the power supply chain.
Spot sale of un-requisitioned power
It has a provision for the sale of un-requisitioned power in the spot market through power exchanges. This is welcome change as it makes the marketing of power transparent and readily available for states and discoms. “The proceeds will be shared among power producers and the state with which it has signed the sale pact,” said Piyush Goyal, MoS for power.
E-auction and imports
The policy allows cost pass-through for the use of imported and e-auctioned coal that producers of power in projects awarded through auctions have to use because of a shortfall in contracted supply by Coal India.
State electricity regulatory commissions must reserve a minimum percentage for purchase of solar energy, so that it reaches eight per cent of total energy consumption, excluding hydroelectricity, by March 2022.
Compulsory shift towards green energy
New coal- or lignite-based thermal power plants after a specified date are to “establish/procure/purchase renewable capacity as prescribed by the Central government.” Existing plants can set up such capacity subject to the approval of procurers. No inter-state transmission charges and losses are to be levied for renewable energy till notified by the Central government.
All projects through competitive bidding
All inter-state transmission projects will be developed through competitive bidding, except projects of strategic importance, those involving technical up-gradation or those needing urgent completion. Power ministry officials said the list of exceptions had been reduced to bring more investment into the sector.
“Competition will reduce the cost of transmission and lead to the timely execution of projects with flexibility to meet emergencies. The consumer will benefit from competition and efficiency in transmission pricing,” said Goyal. State governments will develop Intra-state transmission projects above a cost threshold through competitive bidding.
Smart meters for all
“It shall be compulsory for consumers to use smart meters with consumption over 500 units per month by December 2017 and with consumption over 200 units per month by December 2019,” said the policy statement.
The Central power commission has now been given the right to introduce the required norms for support services necessary for maintaining power quality, reliability and security of the grid, including the method of sharing charges, which until now has been stuck in official red-tape and various other issues that made making changes almost impossible.