Saubhagya Scheme: Tariff Restructuring Key To Lighting Homes Round The Clock

Saubhagya Scheme: Tariff Restructuring Key To Lighting Homes Round The Clock

Why can’t we ensure 24×7 electricity to our households? Poor cost recovery has been the primary reason.

Plugging in the last of the unconnected lot — mostly rural folk — is expensive because the tariffs they are charged are well below the cost of procurement. The distribution companies’ (discoms) revenue gaps are cross-subsidised by industrial and commercial consumers, or by states that directly bear the subsidy.

The recent launch of the Saubhagya scheme, which aims to light up 4 crore homes in deep hinterland, is giving discoms the jitters.

That is because cross-subsidisation of Saubhagya will be tough, given tariffs for industrial and commercial consumers are already prohibitive — in many cases, 50-100 per cent above the 120 per cent ceiling set by the National Tariff Policy.

Currently, the cost of supply is way higher for low-tension, or agricultural and domestic consumers, compared with high-tension, or industrial and commercial consumers, for two reasons: More money needed for last-mile connectivity, and more losses (transmission, distribution and commercial) incurred. Read More…

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