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January 25

Large power consumers may not have to bear cross-subsidy charges- RK Singh

NEW DELHI: The government is planning to remove cross-subsidy charges levied on large power consumers, power minister RK Singh said on Wednesday, offering a major relief to industrial and commercial establishments.

The minister said the government is planning to amend the national tariff policy, which provides for a maximum of 20% cross subsidy charges. "Some states are charging as high as 100%," he said. "We want to do away with the cross-subsidy charges. Rather the states should give direct benefit transfers to the targeted consumers," Singh said, speaking at a conference organised jointly by the Central Electricity Authority and Independent Power Producers Association of India.

The Union power ministry will consult the state governments on the removal of cross-subsidy charges, he said. Singh also said the government plans to introduce a licence renewal mechanism for electricity distribution companies to keep a check on the power supply capabilities of the utilities. The proposal is likely to be part of Electricity Act amendment bill likely to be tabled in Parliament in the budget session, he said.

As per the proposal, the distribution utilities will have to apply for renewal of their licences every five years. "Licences of discoms that do not have adequate longterm power tie ups will not be renewed," Singh said. The amendment bill is likely to propose raising multifold the penalties on distribution companies for load-shedding and propose a direct benefit subsidy transfer mechanism by state governments to power consumers.

ET had on January 9 reported that the government was working on amendments to the Electricity Act to levy hefty penalties on power distribution companies for load-shedding and make provisions for direct subsidy transfers by states to power consumers. 

At present, the Act fixes universal service obligation on distribution licensees to provide electricity to all applicants and the penalty for non-compliance can extend up to Rs 1,000 per day of default. The road map for one of the most awaited reforms in the power sector by enabling electricity consumers to choose their supplier is also likely to be provided in the bill.

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