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					</table>India has operationalized a national compliance framework for renewable energy consumption with the Bureau of Energy Efficiency (<a href="https://beeindia.gov.in/en" target="_blank" rel="noopener">BEE</a>) issuing operational guidelines for the renewable consumption obligation (RCO) mechanism.
The framework signifies a shift from procurement-based mandates to consumption-based accountability.
The BEE had <a href="https://www.mercomindia.com/bee-issues-draft-operational-procedure-for-renewable-consumption-obligations" target="_blank" rel="noopener">issued</a> the draft guidelines in January.
The framework mandates designated consumers (DCs), including energy-intensive industries and distribution companies (DISCOMs), to ensure that a minimum share of their electricity consumption comes from non-fossil sources.
The BEE has been designated as the nodal authority responsible for monitoring, reporting to the central government, and issuing operational procedures, thereby centralizing compliance oversight at the national level.
Compliance Pathways
The guidelines provide multiple compliance routes, allowing flexibility for industries while maintaining accountability.
Designated consumers can meet their obligations through captive renewable generation, procurement from DISCOM supply, open-access sourcing, renewable energy certificates (RECs), and emerging instruments such as Virtual Power Purchase Agreements (VPPA).
Additional pathways include consuming green hydrogen or ammonia and using energy storage systems, provided the stored energy originates from renewable sources.
Financial Mechanisms
A buyout mechanism has been introduced to address compliance shortfalls in case of REC market constraints, with regulated prices set at ₹347 (~$3.70)/MWh for 2024–25, increasing to ₹421 (~$4.49)/MWh by 2029–30.
Corporate-level aggregation of compliance is permitted, enabling companies to optimize renewable investments across portfolios.
The framework mandates a one-time registration fee of ₹15,000 (~$160) for access to the centralized RCO portal and compliance submissions.
Monitoring, Reporting and Enforcement
A multi-layered monitoring and verification system has been established to ensure compliance. Designated consumers must submit annual energy data in standardized formats, within 120 days of the target year.
A 9-month compliance window after the target year is available for adjustments through RECs or buyouts. The framework includes a centralized digital portal to streamline reporting and introduces Forms A-E for standardized submissions.
BEE retains the authority to initiate independent audits or re-verification, either suo motu or based on complaints, with provisions for determining liabilities through additional checks.
Coverage, Exemptions and Sectoral Impact
The RCO applies to designated consumers across sectors, including aluminum, cement, iron and steel, fertilizers, petrochemicals, refineries, railways, textiles, chemicals, automotive, glass, ceramics, and commercial establishments such as hotels and airports, as well as all DISCOMs.
Eligible renewable sources include solar, wind, hydro, biomass, biogas, waste-to-energy, geothermal, tidal, and green hydrogen or ammonia. Nuclear energy is excluded.
Distributed renewable energy systems up to 10 MW, including rooftop solar and behind-the-meter installations, are recognized.
Exemptions include waste heat recovery systems, partial exemptions for cogeneration, and limited exemptions for diesel generator usage below specified thresholds.
Special provisions reduce DRE targets by 50% for hilly and North-Eastern states, with the balance shifted to other renewable categories. Urban DISCOMs must meet 75% of their DRE obligations.
The guidelines also define audit scopes, renewable energy calculation methodologies, and green hydrogen accounting mechanisms through annexures.
Consumption-Based RCO
The RCO framework replaces the earlier renewable purchase obligation (RPO) regime for designated consumers, eliminating separate state-level compliance requirements. Unlike RPO, which focuses on procurement, RCO is explicitly consumption-based, requiring actual utilization of renewable energy rather than reliance on purchase instruments alone.
The trajectory <a href="https://www.mercomindia.com/government-issues-rco-compliance-regime-for-designated-consumers" target="_blank" rel="noopener">defined</a> for DISCOMs increases from 29.91% in 2024–25 to 43.33% by 2029–30, with sub-targets for 2029–30 including 3.48% wind, 1.33% hydro, 4.50% DRE, and 34.02% under other renewable categories.
Recently, the Ministry of Power <a href="https://www.mercomindia.com/ministry-of-power-extends-rco-compliance-deadline-to-may-31-2026" target="_blank" rel="noopener">extended</a> the deadline for submission of RCO compliance details for the financial year 2024–25 to May 31, 2026, following representations from obligated entities citing challenges in meeting the earlier timeline.
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					</table>The Andhra Pradesh Electricity Regulatory Commission (<a href="https://aperc.gov.in/" target="_blank" rel="noopener">APERC</a>) has proposed removing the cap of ₹0.4 (~$0.0044)/kWh on the distribution licensee&#8217;s monthly pass-through of fuel and power purchase cost adjustment (FPPCA) charges.
The amendment also allows the Commission to issue a true-up or true-down order for FPPCA after the distribution company (DISCOM) submits a petition for the full financial year, by the end of June in the following financial year.
The amendment, titled Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff for Wheeling and Retail Sale of Electricity) Eighth Amendment Regulation, 2026, will be effective from April 1, 2026.
New Formula for Calculating FPPCA Charges
The Commission has revised the formula for calculating the FPPCA charges as follows:
FPPCA = (APPC-BPPC) x PPQ/S
FPPCA = Fuel and power purchase cost adjustment
APPC = The actual weighted average power purchase cost per unit of energy will be calculated as the actual total power purchase cost for the month for which the DISCOM is recovering/refunding FPPCA, divided by the actual quantum of power purchased by the DISCOM from sources approved by the Commission for that month.
BPPC = The base weighted average power purchase cost per unit of energy will be calculated as the total power purchase cost approved by the Commission in the retail supply tariff order for the month for which the DISCOM is recovering/refunding FPPCA, divided by the total quantum of energy approved by the Commission in the retail supply tariff order for the DISCOM for that month.
PPQ = The power purchase quantum for the month for which the DISCOM is recovering/refunding FPPCA. It will be the lower of the actual quantum of power purchases and the actual sales grossed after transmission and distribution losses. The transmission and distribution losses to be considered for the above will be the lower of the actual losses for the month or the Commission-approved losses for that year.
S = Actual sales by the DISCOM for the month for which the distribution licensee is recovering/refunding FPPCA.
Recovery/Refund of FPPCA 
The Commission said that FPPCA charges calculated with the revised formula will automatically be recovered/refunded to the consumers by the DISCOM every month in the following ways:
FPPCA will be computed and shown in the current consumption (CC) bills by the DISCOM, in the (n+2)th month, based on actual variations in the costs of fuel and power purchase, and the transmission and scheduling for the power procured during the nth month.
The DISCOM will pass through the FPPCA uniformly across all categories of consumers existing in that month, based on their consumption.
In case the DISCOM fails to compute and raise the FPPCA due to it in the CC bills in the (n+2)th month, the DISCOM will forfeit its right to recover the same for that month. The FPPCA charges not raised by the DISCOM will not be considered by the Commission while issuing the FPPCA true-up/down order after the end of the financial year.
However, if the DISCOM fails to issue FPPCA refunds to consumers, the Commission will consider these amounts while issuing the FPPCA true-up/down order after the end of the financial year.
The DISCOM must submit the monthly details to the Commission as specified under the Regulations by the end of the (n+2) month.
The reports submitted to the Commission will also be made available on the DISCOM’s website. The final true-up/down for the FPPCA for the financial year must also be submitted in accordance with the regulations.
The DISCOM will submit the details of the true-up/down of FPPCA for the nth financial year as part of the Aggregate Revenue Requirement (ARR) for the retail supply business for the (n+2) financial year, if the filings are done on an annual basis. The Commission will determine the true-up/down of the FPPCA amount and include it in the ARR of the retail supply business.
If the filings for the retail supply business are made for the entire control period, the Commission will determine the true-up/down FPPCA amount in separate proceedings, either based on a petition filed by the DISCOM or suo motu.
The Commission will also allow the pass-through of financing costs arising from the time gap between the date the FPPCA true-up/down amount becomes due and the date it is actually allowed in the FPPCA true-up/down order.
The DISCOM will raise the FPPCA bills on the government for consumers who are provided with 100% tariff subsidies under Section 65 of the Electricity Act, 2003. The subsidy true-up/down due to variations in sales of agricultural consumers under the free power category will be determined by the Commission after the end of the financial year.
The DISCOMs must also publish details of the FPPCA computed each month on their websites for at least 1 week before the amounts are shown in the monthly CC bills of consumers.
Commission’s Analysis
The Commission said that the earlier cap on pass-through of FPPCA charges at ₹0.4 (~$(~$0.0044)/kWh was leading to three significant interconnected negative consequences.
It said that the cap on pass-through of FPPCA charges was leading to the accumulation of significant FPPCA true-up amounts and that this would be determined much later. It is argued that sudden, large charges cause severe tariff shocks for all consumer categories.
It said that manufacturers and industries, particularly those operating on tight margins and fulfilling long-term, fixed-price contracts for their goods, face a substantial risk. They raised concerns that when significant FPPCA true-up is levied retroactively, it makes it difficult for them to factor it into the price of goods already sold.
The Commission also noted that the current mechanism for pass-through of FPPCA charges was leading to disputes between property owners and new tenants, as new tenants refused to pay FPPCA true-up amounts calculated based on the energy consumption by the previous tenants.
It further emphasized that under the existing mechanism, restricting the pass-through of FPPCA charges, especially during periods of high and volatile fuel and power prices, forces the DISCOMs to absorb the cost difference for an extended period.
The Commission added that this cost absorption by the DISCOMs reduces their cash flow, increases their working capital requirements, and threatens their financial sustainability and their ability to procure power reliably.
Last year, APERC <a href="https://www.mercomindia.com/andhra-pradesh-notifies-tariff-regulation-norms-for-renewable-energy-projects" target="_blank" rel="noopener">issued</a> the Andhra Pradesh Electricity Regulatory Commission (Terms and Conditions for Tariff Determination from Renewable Energy Sources) Regulation, 2025, determining the tariffs for renewable energy projects.
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Andhra Pradesh to Remove Cap on Fuel, Power Cost Adjustment Pass-Through

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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has proposed a draft procedure to verify the captive status of power-generating projects supplying to users located across multiple states, defining the ownership and consumption terms for captive power projects in the country.
The draft proposal is open for stakeholder suggestions until December 1, 2023.
Verification of consumption criteria will be based on the net electricity generated from the generating units in a generating station, i.e., gross electricity generated less auxiliary consumption, identified for captive use.
If a captive project fails to meet the requisite conditions in a financial year, the project will cease to be a captive power project, and the users will cease to be captive.
Captive Project Criteria
To be labeled a captive power project, a power facility must meet specific ownership and usage criteria. This means that at least 26% of the project&#8217;s ownership must be held by the users who will directly benefit from its electricity. Moreover, a minimum of 51% of the electricity generated annually should be set aside for use by these captive users.
In the case of power projects established by registered co-operative societies, the ownership and power consumption conditions should be met collectively by all the members of that society.
If it&#8217;s an Association of Persons (AoP), the captive users must jointly possess no less than 26% of the project&#8217;s ownership. Additionally, they should utilize at least 51% of the electricity generated annually, aligning with their ownership shares. This consumption proportion has a small allowable variation of up to ten percent.
When a generating station is owned by a company created solely for that station&#8217;s operation, the ownership and usage criteria for a &#8216;captive power project&#8217; are applied not to the entire station but to the specific units within it that have been earmarked for captive use.
Furthermore, captive users must collectively hold at least 26% of the equity related to the generating units specified as the &#8216;captive power project&#8217; within the generating station. This ensures they have a significant ownership stake in the specific facility section designated for captive use.
Captive users must make sure they consistently meet the consumption percentages mentioned. If they fail to maintain the minimum percentage of captive use in any given year, the entire electricity generated will be treated as if a power-generating company is supplying it.
In cases where the captive power project and its users are spread across multiple states, the Central Electricity Authority (CEA) will verify their captive status based on a procedure approved by the Central Government.
Verification of 26% ownership will be done based on the weighted average of shareholding when there is a change in ownership structure in the financial year under consideration.
Verifying Authority
The CEA is proposed to be the verifying authority for a captive power project&#8217;s status in one state when at least one of its captive users is located in a different state.
In the event of non-compliance or failure to provide requested clarifications by the CEA within the designated timeframe, it has the discretion to determine the project&#8217;s status based on the available data or documents submitted by the project.
Finally, CEA is responsible for verifying whether the conditions related to captive status have been met and communicating this status to relevant entities, including distribution licensees (DISCOM), State Electricity Regulatory Commissions, State Load Dispatch Centers (SLDC), captive projects, and captive users.
General Conditions
Captive users can consume electricity either directly or through an energy storage system. Additionally, the electricity consumption by a subsidiary company of a company that is a captive user and the consumption by a company&#8217;s holding subsidiary acting as a captive user will also be considered part of the captive user&#8217;s consumption.
In case of any change in ownership structure during the year under consideration, a statement with the details of the change in the ownership structure along with the relevant documentary evidence must be submitted to CEA along with the application to verify the status of the project and its captive users.
The verification of ownership and consumption for any change in the captive user during a year will be conducted for the respective periods of change. This involves assessing the proportionate generation and the energy consumed by the captive user during these specific periods.
Technical losses in the electrical network and energy storage system will be included in the energy consumption of the captive users.
The aggregate energy generated from the captive project unit will be the gross energy generated from the unit, less aggregate auxiliary consumption during the time block. The normative auxiliary consumption for similar units may be considered for captive verification status without measured data on auxiliary consumption.
The energy consumption by the captive users with open access will be considered lower than actual energy generated by the captive unit or actual energy drawn through open access limited to a maximum of scheduled open access energy during that time block.
Verification of Status
The captive project must submit an application and the necessary documentation to CEA to initiate the verification. Following this, the project and its captive users should furnish an affidavit before September 30 each year detailing their annual electricity generation, consumption by captive users, and equity shareholding for the preceding year.
Once CEA receives the application and all required documents, it will communicate the status of the project and its captive users within two months. Additionally, the Regional Load Dispatch Centers (RLDC), SLDC, and DISCOMs operating where the project and captive users are located are expected to assist CEA during the verification process.
Verification of Documents 
If a power project is a company incorporated under the Companies Act:
<ul>
<li>Certificate issued by the chartered accountant or by the company secretary that includes information about the total equity, authorized, issued, subscribed, and paid-up equity share capital of the generators, as well as details regarding the holding of equity share capital with voting rights of the project and that of the captive users.</li>
<li>Certified copy of the Memorandum of Association and Articles of Association, including any subsequent amendments, should be provided. This copy should also include a certification confirming that these documents contain provisions for engaging in electricity generation.</li>
<li>Excerpt from the most recent annual return that displays the shareholding details submitted by the generators and captive users to the registrar of companies should be done within one month of filing to facilitate cross-verification.</li>
<li>Certificate regarding holding of equity share capital with voting rights in the captive project by the captive user duly certified by the chartered accountant or the company secretary.</li>
<li>A copy of the board resolution authorizing the signatory of the captive project and captive users. This authorized signatory must be the managing director, the whole-time director, or the company secretary.</li>
</ul>
Any change in the authorized signatory and revocation for approval for electricity generation by the board by way of amendment to the Memorandum of Association and Articles of Association must be intimated by the captive project within 30 days from the date of such change to the DISCOM and CEA.
If a co-operative society owns the generating project:
<ul>
<li>Certificate by the chartered accountant showing a detailed breakup of the issued, subscribed, and paid-up equity share capital of the captive project and the details of holding of equity share capital with voting rights by the captive users.</li>
<li>Certificate of incorporation by the registrar of the co-operative society.</li>
<li>Relevant extract of the latest annual report of the captive project showing share capital details.</li>
<li>A copy of the resolution passed by the general body authorizing the chairperson or managing director of the co-operative society as the authorized signatory with the attested signature of such signatory.</li>
</ul>
Any revocation of sanction for carrying on electricity generation by the society must be informed within 30 days from the date of such change to the DISCOM and CEA.
If an AoP owns the project, they are expected to provide a copy of the business agreement specifying the shareholding of individuals as members of the AoP. This copy should be certified by a chartered accountant and submitted by the authorized signatory of the AoP, along with a certified copy of the nomination of this signatory.
If the project is owned by a special purpose vehicle (SPV), they should submit the same documents as the others depending on whether the SPV is a company of an AoP.
Shareholder Defaults
If a shareholder fails to meet the electricity consumption criteria, and the remaining captive users collectively meet the ownership requirement of at least 26%, the shareholder in default must no longer be considered a captive user and will lose the associated benefits.
However, the other captive users who meet the criteria of not less than 26% ownership and consumption of not less than 51% of the total electricity generated (with a permissible variation of up to 10%) per their individual shareholdings will maintain their captive status.
When a shareholder defaults in fulfilling the consumption criteria and other captive users together do not comply with ownership criteria of not less than 26%, the captive project will lose its captive status, and all captive users must forgo the concessions available to a captive user.
Metering
Each unit of a captive project should have a separate interface meter with a real-time communication facility with RLDC and/or SLDC.
In September, in amendments to the Electricity Rules, 2005, the Ministry of Power <a href="https://www.mercomindia.com/ministry-electricity-rules-allows-multiple-users-group-captive" target="_blank" rel="noopener">reverted</a> to the previous regulation, allowing collective captive users to hold the minimum ownership of 26% in a group captive open access project.
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Ministry Proposes Procedure to Verify Captive Status of Power Projects

The implementation of several energy efficiency programs in India has led to electricity savings to the tune of 113.16 Billion Units (BUs) in 2018-19, which was 9.39% of the net electricity consumption (1,204 BUs), according to the Bureau of Energy Efficiency’s (<a href="https://www.beeindia.gov.in/" target="_blank" rel="noopener noreferrer">BEE</a>) recently released report.
BEE conducts an annual study comparing the actual energy consumption in a particular year with the estimated energy consumption in a case where the current energy efficiency measures had not been undertaken. The overall objective of this study is to assess the impact of all the energy programs in India in terms of total energy saved and reduction in the amount of carbon emissions in 2018-19. This assignment has taken energy efficiency estimation based on the impact of the programs implemented since FY 2015-16.
Union Power Minister R.K.Singh released the report through a video conference.
The report states that the total energy savings achieved in 2018-19 stood at 23.73 Mtoe (million tons of oil equivalent), which is 2.69% of the total primary energy supply, which was estimated to be 879.23 Mtoe during 2018-19. This includes both supply and demand-side sectors of the economy.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19125" src="https://mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png" alt="Summary of Energy Savings" width="1466" height="1481" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings.png 1466w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-297x300.png 297w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-1014x1024.png 1014w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-768x776.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-650x657.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-624x630.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-45x45.png 45w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-600x606.png 600w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Summary-of-Energy-Savings-100x100.png 100w" sizes="auto, (max-width: 1466px) 100vw, 1466px" /></a>
Singh said, “We have pledged in Conference of the Parties (COP-21) that we will bring down energy intensity of the economy by 33% to 35% compared to 2005 levels by 2030. Now, with our energy efficiency initiatives, we have already reduced the energy intensity of our economy by 20% compared to 2005 levels, which is a very good performance indeed.”
The COP refers to those countries that have signed the 1992 United Nations Framework Convention on Climate Change. India was the 62nd country to ratify the Paris Agreement during the COP-21 conference held in Paris in 2016.
The minister also pointed out that energy efficiency has a dual benefit as it not only saves money but also saves the environment. He said that there is a huge capacity for bringing
efficiency, especially in Micro Small and Medium Enterprise (MSME) and housing sectors, that have now been taken up.
Overall, the study concluded that various energy efficiency measures have translated into monetary savings of ₹891.2 billion (~$~$11.9 billion) against the savings in 2017-18, which stood at ₹536.2 billion (~$7.1 billion).
The industrial sector contributed to 49.17% of the total energy savings, while the domestic sector accounted for 33.34% of the total savings achieved during FY 18-19.
<a href="https://mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png"><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-19126" src="https://mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png" alt="" width="1470" height="713" srcset="https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency.png 1470w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-300x146.png 300w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-1024x497.png 1024w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-768x373.png 768w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-650x315.png 650w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-624x303.png 624w, https://cms.mercomindia.com/wp-content/uploads/2020/05/Energy-efficiency-600x291.png 600w" sizes="auto, (max-width: 1470px) 100vw, 1470px" /></a>
“These efforts have also contributed to reducing 151.74 million tons of CO2 emissions, whereas last year this number was 108 MTCO2,” states the report.
Governments across the world, including India, are gradually shifting towards renewable energy integration into the grid and systems approach on engendering energy efficiency practices in various sectors.
The report also mentioned that the United Nations Industrial Development Organization, in collaboration with BEE, is executing a global environment facility funded national project to promote energy efficiency and renewable energy in selected MSME clusters in India.
The BEE report also mentioned that similar programs are spanning across major energy-consuming sectors in India, such as industry, commercial, residential, transport, agriculture, and municipal.
Energy consumption across all the sectors of the economy has increased in the past few years. With the growing economy &amp; rapid urbanization, it is expected to increase further in the coming years.
In January 2020, the Ministry of Power announced the release of its ‘State Energy Efficiency Index 2019’ report, which keeps tabs on the progress made by the Indian states and union territories regarding energy efficiency (EE) initiatives. The report covers energy efficiency initiates in 36 states and union territories (UT) based on 97 indicators. The index was developed by the Bureau of Energy Efficiency (BEE) and the Alliance for an Energy-Efficient Economy (AEEE). The index is created to help states and UTs contribute towards national goals on energy security and climate action by driving energy efficiency policies and program implementation at a state and local level, according to the MoP. The latest report showed that most initiatives taken by states and UTs were policy or regulation based. Read the details of the report <a href="https://mercomindia.com/haryana-karnataka-kerala-top-states-energy-efficiency/" target="_blank" rel="noopener noreferrer">here</a>.
In August last year, Mercom had <a href="https://mercomindia.com/bee-aeee-state-energy-efficiency-index/" target="_blank" rel="noopener noreferrer">reported</a> that about the State Energy Efficiency Preparedness Index that aimed to assess state policies and programs aimed at improving energy efficiency across various sectors. Based on 63 indicators, the ‘Front Runner’ states in the inaugural edition of the Index were Andhra Pradesh, Kerala, Maharashtra, Punjab, and Rajasthan.

India’s Energy Efficiency Initiatives Help Save Over ₹891 Billion in 2018-19: BEE Report

The Ministry of Power has issued a proposal incorporating new modifications to the revised proposal for amendments to the Electricity Act 2003.
<a href="https://mercomindia.com/power-ministry-proposes-electricity-act-amendment/" target="_blank" rel="noopener">In September 2018</a>, the Ministry of Power had issued revised proposal for amendments to the Electricity Act 2003, in which it had included ample provisions for renewable energy generation and distribution. The new modifications are related to simplification of tariff categories and rationalization of retail tariff.
Through these modifications, the Ministry of power proposes incorporating tariff categories on sanctioned load and consumption basis.
In the proposal, the government has introduced many novel features like adoption of a uniform tariff structure across all states and consumer categories. It has also recommended imposition of penalty for exceeding the approved load in any given month.
The new proposal is open for comments up to November 5, 2018.
Key Points Proposed
<ul>
<li>Tariff structure must do away with the concept of different tariff for different customer categories.</li>
<li>The price of electricity consumed must be based on load used and energy consumed.</li>
<li>The principle to be adopted in new tariff structure will be based on slabs in sanctioned load and units consumed.</li>
<li>A maximum of five load categories will be created; 0-2 kW, &gt;2 kW-5 kW, &gt;5 kW-10 kW, &gt;10 kW-25 kW and &gt;25 kW.</li>
<li>For load bracket of 0-2 kW energy consumption slab of 0-200 units will be considered, for &gt;2 kW-5 kW, energy consumption slab of 201-400 units; for &gt;5 kW-10 kW, energy consumption slab of 401-800 units; for &gt;10 kW-25 kW, energy consumption slab of 801-1200 units and for &gt;25 kW energy consumption slab of &gt;1200 units will be considered.</li>
<li>As consumption pattern is different in different states, the slab and bracket range for load and energy consumption will be decided by state electricity regulatory commission (SERC).</li>
<li>Subsidy and cross-subsidy will be handled through different slabs in load and energy consumed. Consumers of lower slabs and brackets will be subsidized by consumers of higher slabs and brackets.</li>
<li>A systematic method must be adopted to automatically revise load if the average load in previous year exceeds the approved load. This will prevent customers from declaring less load.</li>
<li>A penalty has been proposed to be imposed for exceeding the approved load in any given month.</li>
<li>States will have option of adopting kW and kWh or kV and kVAh based tariff. For above 10 kW load level, the Ministry is of the opinion that it would be preferable to have kVA and kVAh as the units.</li>
<li>SERCs can create special tariff category for electric vehicle (EV) charging stations.</li>
</ul>
The Ministry of Power believes that tariff structures across states in India have become very complex and there is a need to simplify, harmonize and rationalize the tariff structure across states. The question of tariff for EV charging stations has been taken care of in the proposed new modifications, this is expected to usher in EV adoption across India.
<a href="https://mercomindia.com/ministry-of-power-amendment-tariff-policy/" target="_blank" rel="noopener">Prior to this</a>, Ministry of Power had issued <a href="https://powermin.nic.in/sites/default/files/webform/notices/Proposed_amendments_in_Tariff_Policy.pdf" target="_blank" rel="noopener">draft</a> amendments to Tariff Policy 2016 keeping in view the changes and dynamic nature of the power sector.
When contacted, an official with the Ministry of Power said, “We are focused on removing the complexities of Electricity Act and Tariff Policy. It is paramount for 24*7 power to all, by ensuring smart governance and providing access to affordable electricity for all households.”
“Power demand is now going to amplify due to the efforts for electrification. Not all users even in a city utilize the same amount of energy, the consumption levels are varied, and we have tried to make our policy simple by focusing it around consumption of individual consumers. Earlier, consumers were widely classified into domestic, industrial, institutional, agricultural and commercial, due to this the benefit of low cost of power could not be provided to the one’s in need. Now we will be able to do so,” added the official.

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