Bengaluru (Aryavarth): The recent announcement by the Government of India to implement the Time of Day (ToD) Tariff has raised concerns among retail consumers who fear the policy will lead to higher electricity costs during essential evening and night hours. Critics argue that the policy appears to favor industrialists who primarily operate during the daytime when solar power is available and tariffs are lower.
The Government of India has introduced two changes to the prevailing power tariff system through an amendment to the Electricity (Rights of Consumers) Rules, 2020. The changes are the introduction of Time of Day (ToD) Tariff and rationalization of smart metering provisions.
Rather than being charged for electricity at the same rate at all times of the day, the price you pay for electricity will vary according to the time of day. Under the ToD Tariff system, the tariff during solar hours (a duration of eight hours in a day as specified by the State Electricity Regulatory Commission) shall be 10%-20% less than the normal tariff, while the tariff during peak hours will be 10 to 20 percent higher.
ToD tariff would be applicable for commercial and industrial consumers having a maximum demand of 10 KW and above, starting from 1st April 2024, and for all other consumers except agricultural consumers, starting from 1st April 2025. Time of Day tariff shall be made effective immediately after the installation of smart meters for consumers with smart meters.
Most of the State Electricity Regulatory Commissions (SERCs) have already implemented ToD tariffs for the large Commercial and Industrial (C&I) category of consumers in the country. With the installation of smart meters, ToD metering at the domestic consumer level will be introduced as per Tariff Policy mandate.
Under the ToD Tariff system, the price of electricity will vary based on the time of day, with higher tariffs during peak hours. This means that retail consumers, who typically rely on electricity during the evening and night, will face increased costs. The announcement acknowledges that tariffs during non-solar hours, when thermal and hydro power are used, will be higher than during solar hours when solar power is cheaper. As a result, consumers are likely to experience a significant burden of higher electricity bills precisely when they require electricity the most.
In most parts of Northern, Eastern, and Southern India, nighttime temperatures become unbearable, making air conditioners or air coolers a necessity even during the night to combat discomfort and health risks. Furthermore, can the consumer switch off the refrigerators and lights at night?
However, with higher tariffs during non-solar hours, consumers may be discouraged from using air conditioners at night due to the financial implications, potentially leading to sleep disturbances, reduced productivity, and health issues.
Moreover, the policy announcement fails to address the specific tariffs for lighting during nighttime hours. If the nighttime tariffs are higher, as suggested for non-solar hours, consumers would face increased costs for keeping lights on during the night. This additional financial burden on retail consumers who rely on adequate lighting for various activities and security purposes further adds to their concerns.
While the ToD Tariff system seemingly poses challenges for retail consumers, daytime industrialists stand to benefit from the policy. With lower tariffs during solar hours, these industrialists can strategically plan their operations to take advantage of reduced power costs, giving them a competitive edge over retail consumers. Critics argue that this discrepancy in tariff structure places an unfair burden on the already struggling retail sector.
As retail consumers voice their concerns and consumer advocacy groups question the fairness of the policy, the government faces growing pressure to address the potential negative implications and reevaluate the tariff structure. Public sentiment remains divided as the policy’s effects on various sectors and the broader economy continue to be debated.
The government, in response to the escalating concerns, may need to reassess the ToD Tariff system and ensure that the interests and well-being of retail consumers are taken into account. As the situation unfolds, stakeholders eagerly await further updates and potential adjustments to the policy to ensure a fair and equitable electricity tariff system for all.
Union Power and New & Renewable Energy Minister R. K. Singh has defended the amended and positioned it as a victory for consumers. He said, “The ToD tariffs, comprising separate tariffs for peak hours, solar hours, and normal hours, send price signals to consumers to manage their load according to the tariff. With awareness and effective utilization of ToD tariff mechanism, consumers can reduce their electricity bills. Since solar power is cheaper, the tariff during the solar hours will be less, so the consumer benefits. During non-solar hours, thermal and hydro power as well as gas-based capacity are used – their costs are higher than that of solar power – this will be reflected in the Time of Day Tariff. Now consumers can plan their consumption to reduce their power costs – planning more activities during solar hours when power costs are less.”