The move is a step towards the government's intention to shift India's electricity trading from long-term (25 years) power purchase agreements (PPAs) to electricity markets (exchanges) and shorter PPAs of up to 12-15 years. It also means the government has revived its plan to introduce Market-Based Economic Dispatch (MBED) mechanism in India.
Modi, who has had mixed success pushing through his reform agenda since coming to power 16 months ago, has prioritised tackling a problem that is stifling bank lending needed for a revival in Asia's third largest economy, three senior government sources with direct knowledge of the plan said.
AAP said over the last three years, the state power company and politicians in Maharashtra have made consumers to pay excess tariff of Rs 22,000 crore.
DERC has directed BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd to present their case before it at a special hearing scheduled today.
The panel's recommendations come barely a couple of months after the government allowed power companies to pass on cost of imported coal to consumers, a move that is likely to raise electricity tariff.
Tata Power is likely to be the biggest beneficiary because as per estimates, one can expect the company to report Rs 200 crore profit due to the 55-58 paisa hike, instead of Rs 1,000 crore loss without the hike
Private power producers have said that any hike in customs duty on import of power equipment, mainly from China, would lead to increase in electricity tariffs and would be a major impediment to inclusive growth.