Differential tariffs: their relevance in Indian context

Current scenario of electricity tariffs in India

$$$ / KWh  Tariffs are set on annual basis by the regulatory commission
 Revision of tariffs is delayed due to incompetency of Discoms as well as
SERC in some cases
 UDAY scheme highlighted the need of more frequent tariff revisions like
quarterly, depending on the supply-demand situation

Relevance of differential tariffs or Time of Day tariffs in Indian context

 No viable option to manage intermittency of RE power which will reach ~32%
of the generation mix by 2022
 Different or TOD tariffs will help in management of load by shifting the peak
demand to off-peak hours
 Not much infrastructure is required for TOD tariffs and they have been
already implemented for industrial and commercial consumers
 Rate design principles of TOD tariffs
Current implementations practices
Demand

High peak TOD tariffs

• Industrial and commercial consumers are being

Low off-peak TOD tariffs
Original demand in peak hours
Shifted demand to off-peak hours
Solar generation
Supply
Balanced demand-supply curve by adopting TOD tariffs
targeted due to their high power consumption
density
• Present meters are retrofitted to record usage as
per TOD tariffs
• Not used for residential consumers on large-
scale due to their low sanctioned load and the
resulting capital requirements

Rate design principles

1. Based on electricity usage pattern and profile of consumer
2. Presence of non-essential load during peak demand
3. Off-peak hours should coincide with preferred shifting hours of consumer
4. Sufficient power during off-peak hours to meet the shifted demand
5. TOD incentives must be >= to the costs (if any) that will be incurred by consumer in shifting the load
Recommendations for promoting TOD tariff adoption among utilities
Rolling out ToD tariffs
All of the for LT and Domestic Developing a
consumers should consumers through pilots robust Introduce ToD
be enrolled for ToD and measuring price implementing tariffs for
tariffs scheme by elasticity of demand framework for power
Leveraging the generation
default but there monitoring impact
Smart Meter
National Program should be an of ToD tariffs which will
for the requirement option of opting promote fresh
measurement and out investment in
monitoring generation
infrastructure plants for
needed for ToD peaking power
tariffs.