The Government of India has introduced two changes to the prevailing power tariff system through the Electricity (Consumer Rights) Amendment Rules, 2020. These changes are: introduction of Tariff Day (ToD) and rationalization of smart metering provisions. Time of day (ToD) tariff introduced.
Instead of being charged the same rate for electricity at any time of the day, the price you pay for electricity will vary based on the time of day. Under the ToD tariff system, the tariff during solar hours (a duration of 8 hours per day as determined by the State Electricity Regulatory Commission) of the day will be 10% to 20% lower than the normal tariff, while the peak tariff will be 10% to 20% higher.
The ToD tariff would be applicable for commercial and industrial customers with a maximum consumption of 10 kW and above from 1 April 2024 and for all other customers except agricultural customers from 1 April 2025 at the latest. The time of day tariff will come into effect immediately after the installation of smart meters for consumers with smart meters.
Union Power and New & Renewable Energy Minister Shri R. K. Singh said that the ToD is a win-win for the consumers as well as the power system. “TOD tariffs containing separate tariffs for peak hours, solar hours and normal hours send price signals to consumers to manage their load according to the tariff. With awareness and effective use of the ToD tariff mechanism, consumers can reduce their electricity bills. Since solar power is cheaper, the tariff during solar hours will be lower, so consumers benefit.
During non-solar hours, thermal and hydropower as well as gas-based capacity are used – their costs are higher than the costs of solar energy – this is reflected in the daily tariff. Now consumers can plan their consumption to reduce their electricity costs – planning more activities during the hours of sunlight when energy costs are lower.”
The Union Minister said the ToD mechanism will also ensure better integration of renewable energy into the grid, thereby facilitating a faster energy transition for India. “The ToD tariff will improve the management of fluctuations in renewable energy generation, support surge in demand during peak hours of renewable energy generation, thereby increasing the integration of more renewable energy into the grid,” said Shri R.K. Singh.
Most of the State Electricity Regulatory Commissions (SERCs) have already introduced ToD tariffs for large commercial and industrial (C&I) categories of consumers in the country. With the installation of smart meters, ToD metering will be introduced at the domestic consumer level as mandated by the tariff policy.
The Time of Day (TOD) rate is globally recognized in the electricity industry as an important demand side management (DSM) measure used as a means of incentivizing consumers to shift part of their load from peak to off-peak hours, thereby improving the system load factor by reducing demands to the system during peak hours. Various statutory provisions already exist to enable and support ToD tariff implementation (i.e. Tariff Policy, 2016, Electricity Act, 2003 and National Electricity Policy, 2005).
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