Consumer shouldn’t be asked to pay for inefficiencies of discoms: RK Singh, Power & renewable energy minister
Power rates across the country will fall as the Centre plans legal measures to fix bill-collection inefficiencies, put a lid on cross-subsidies and ensure that consumers don’t pay for high distribution losses, minister for power and renewable energy R K Singh said. In an interview with Nishtha Saluja, Sarita Singh and Himangshu Watts , Singh said a slew of policy changes and strict directions to states will be more than the present schemes to transform the power sector. The ministry will ask states to stop burdening industrial consumers with more than 20% cross-subsidy surcharges. The ministry also plans steps to prevent states from reneging power purchase agreements and fix deadlines to penalise distribution utilities for load shedding. Edited excerpts:
There is a view that tariffs must rise if you want power sector to grow, and reform is synonymous with tariff hike. Your views.
I believe the technical and commercial losses of the discoms need to come down to below 15%. A paying consumer should not be asked to pay for inefficiencies of the discoms or for the theft. Allowable losses while fixing the tariff should not be more than 15%. Once you do that, the price of power, which consumers pay, will come down. We will do this by talking to the regulators and laying guidelines in the law. We are anyway giving all support to discoms to strengthen their network.
If they are asking for higher tariff, that is because they have not tried to control their losses. Controlling losses is not so difficult. Manipur brought its losses down from 58% to 26% in just one and a half years. All they did was, install prepaid meters everywhere. The major problem, which we see, is in the metering and the billing, not in recovery after billing, because recovery after billing is 90-95%.
How will you ensure 24×7 power supply to consumers?
I am thinking of fixing a date by which we will begin making power supply a service obligation. Once we have this obligation, if discoms resort to load shedding, they have to pay a penalty. If there is a disruption because of an act of God or a technical glitch, fine. But gratuitous load shedding because you don’t want to buy electricity will not be accepted. Once we do that, much of the diesel generators will become useless, and we will be one step closer to cleaner environment. It is in the law, but it’s not being enforced. There is no reason to not give 24×7 supply because the power is available.
Most states deter large electricity consumers from choosing their source of supply as provided in the Act by levying high cross-subsidy surcharges.
The tariff policy says cross-subsidy surcharge should not be more than 20% of the tariff. We will make sure that it is implemented and we will make the legal procedure stronger.
By when do you see all this actually happening on the ground?
Amendments are proposed in the tariff policy and Electricity Act. Once I see the amendments, it will go to the law ministry and then we will circulate it with state governments. It will be presented, hopefully, in the budget session of parliament. This will ensure Make in India becomes feasible. Right now, Make in India has one problem — the input power costs are high.
Will these measures improve the health of discoms ?
That’s sine qua non. I am writing to all the chief ministers saying high technical and commercial losses are unacceptable. I am asking them to change the way things work. With whatever money the Centre is giving through the schemes, don’t buy ordinary meters, do away with the human interface. I see a bill, I pay through my mobile. The human interface is gone, the cost of billing and cost of collection is gone, so it saves a lot of money and the realisation goes up.
Will this be more effective than schemes that have been tried?
All these schemes are ongoing. We are spending crores of rupees on rural electrification, strengthening distribution and sub-transmission system, feeders and all are still ongoing. So money is not an issue. What we are saying is do away with the human interface: no meter reader, no printed bills. Rather implement pre-paid meters rechargeable through mobile. This is pro-poor and a poor man will never get disconnected.
So then across country power rates will fall?
Across country power rates will fall. Once tariff policy is amended, people will have to become efficient.
Many states are not honouring PPAs.
We have told all states there is no question of not honouring the PPAs. If you have bid out, you have to sign the PPA. You can’t have the doubt after you have given the LoA, unless the results are against the market.
How do you plan to address the stressed assets in power sector?
I took one meeting to review the stressed assets and we are working out ways and means of getting those stressed assets on line. Some of the projects will come on line as soon as the auction for coal linkages – Shakti- becomes effective. There are some others which are in the NCLT route already. Where people are not getting PPAs, we have thought of a methodology, whereby PTC will aggregate about 4,000 MW demand and call bids.
What is the update on the proposed hydro policy?
Hydro is essential because it will give balancing power to the grid. With this high quantity of solar and wind, which we are putting into our system, we need hydro. The hydro policy is not something which necessarily means higher subsidy.
The way we calculate the term for which the loans are given must change. The depreciation should be extended. Hydro plant has a life of 100 years. You cannot depreciate the asset in 12 years rather spread it to at least 30 years. Hydro tariffs in initial years are very high and 30th year onwards, they drop to 80 paise. If the depreciation period is extended, tariff will be a flat, reasonable amount. The loan tenure should be extended to 25 years. Then another thing which we want to do is that the irrigation portion should be funded separately by the irrigation department and the power portion by power ministry.
Industry is concerned about wind auctions. What is your view?
Because the rates have gone down, they were feeling that they were putting pressure on their margins. Now, the thing is, I have announced the roadmap for 60 GW wind capacity target. I’m providing enough orders for the established industry, so there is no reason for the industry to be under pressure.