Govt Proposes Automatic Monthly Change in Power Tariff Based on Fuel Cost

Electricity bill of people is likely to vary with the change in fuel cost, power purchase cost and transmission charges, as per the draft Electricity (Amendment) Rules, 2022.

The draft suggested that Fuel and Power Purchase Adjustment Surcharge (FPPAS) means the increase in cost of power, supplied to consumers, due to change in fuel cost, power purchase cost, and transmission charges with reference to cost of supply approved by the State Commission. FPPAS shall be calculated and billed to consumers, automatically, without going through regulatory approval process, on monthly basis, according to the formula, prescribed by the respective State Commission, subject to true up on annual basis as decided by the State Commission.

The Ministry of Power has sought comments from National Solar Energy Federation of India, FICCI, ASSOCHAM, Electric Power Transmission Association, CMDs/MDs of Discoms/Gencos of all state governments and others on the draft rules by September 11.

This came after the Electricity (Amendment) Bill 2022 was introduced in Parliament during the winter session. However, it was later sent to the standing committee for further deliberation amid protests by several Opposition parties.

The draft also suggested the surcharge payable by consumers seeking open access shall not exceed 20 per cent of the average cost of supply.
The Power Ministry said that the Appropriate Commission shall within 90 days of publication of these rules, specify a price adjustment formula for recovery of costs, arising on account of the variation in the price of fuel, or power purchase costs and the impact in the cost due to such variation shall be automatically passed through in the consumer tariff on a monthly basis using this formula. Such monthly automatic adjustment shall be trued up on annual basis by the Appropriate Commission, it said.

The ministry said distribution licensee will do accounting of due subsidy in accordance with the SOP by the Central government and the State Commission shall review the resource adequacy every six months for each of the distribution licensees.
The draft also suggested that the Authority shall decide the cases for grant of concurrence to hydroelectric generation scheme within 150 days and will decide on grant of concurrence to off-the river Pumped Storage Plant scheme within 90 days.

The developer/owner of the Energy Storage System (ESS) shall have an option to sell/lease/rent out of storage space in whole or in part to any utility engaged in generation or transmission or distribution or to a Load Despatch Centre. The standalone ESS will be a delicensed activity at par with a generating company.

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