Govt mandates phased rollout of time-of-day tariffs; asks states to offer discounted rates during solar hours

The amendments have been brought in tandem with the ongoing national smart meter mission under which millions of prepaid smart meters are being installed in households and other consumer segments.

The government has notified amendments to the Electricity (Rights of Consumers) Rules, 2020 in which it has mandated a timeline for the rollout of time-of-day tariffs (ToD), which refers to having differentiated tariffs for peak and non-peak hours in a day.

The amendments have been brought in tandem with the ongoing national smart meter mission under which millions of prepaid smart meters are being installed in households and other consumer segments for better energy accounting. It is through smart meter installations that the government can also finally introduce ToD, wherein the intention is to shift the demand of the electricity-guzzling commercial and industrial (C&I) sectors to non-peak hours so that the tariffs are also cheaper for them. Under ToD, power tariffs during peak hours are charged higher, and during off-peak hours, they are supposed to be lower.

In its latest amendment to the Electricity (Rights of Consumers) Rules, 2020, the government has directed state power regulators to ensure that tariffs during solar hours are at least 20 percent lower than the usual tariffs across all categories (except for agricultural connections). Solar hours here would be considered as a duration of eight hours during the day as may be specified by the state electricity commissions.

In an interview with Moneycontrol in April, Union power minister RK Singh mentioned this move. "Yes, there should be dynamic pricing. That’s why I want the smart prepaid metering on the ground as soon as possible, so that we have a time-of-day tariff. And that will help the consumer. It will help the consumer because during solar hours, they will get much cheaper power," Singh told Moneycontrol.

The government also mandated that for C&I consumers having a maximum demand of more than 10 Kw, the ToD tariff will have to commence by April 1, 2024. For other consumers, except agricultural connections, the tariffs will have to be made effective from April 1, 2025.

"The Time of Day (ToD) tariff specified by the state commission for commercial and industrial consumers during peak period of the day shall not be less than 1.20 times the normal tariff and for other consumers, it shall not be less than 1.10 times the normal tariff," read the government notification.

The government has also mandated that all types of smart meters shall be read remotely at least once a day and the other pre-payment meters shall be read by an authorised representative of the distribution licensee at least once every three months. It stated that the data regarding energy consumption shall be made available to the consumer, through website or mobile application or Short Message Service (SMS) and the like.

"Consumers having smart pre-payment meters shall also be given the data access for checking their consumption and balance amount at least on daily basis. After the installation of smart meters, no penalty shall be imposed on the consumer, based on the maximum demand recorded by the smart meter, for the period before the installation date," it stated.