State Power Ministers to discuss DBT issue

Extending the Direct Benefit Transfer (DBT) scheme to the power sector is becoming a topic of discussion among one and all in the government.

After the Chief Economic Advisor to the Finance Ministry Arvind Subramanian and the Minister of State for Power, R K Singh, advocated the move, the subject has found its way into the agenda for the Conference of Power and Renewable Energy Ministers of States and Union Territories to be held on December 7.

According to the agenda, there will be a discussion on how to transfer benefits from the State Government in the form of subsidy for power consumption directly to the consumers. BusinessLine had reported on November 26 that a strong view was emerging in the corridors of power to use the DBT mechanism in the domestic electricity market.

The State power ministers will also seek to mandate cross subsidy charges within the specified limit prescribed in the Tariff Policy 2016. The agenda also says that, “One of the critical aspects of tariff setting is to enable recovery of efficient and prudent costs incurred by regulated entities to ensure viability of the entire value chain while facilitating power supply at reasonable rates to consumers.”

The Ministers are also likely to adopt a resolution that “Consumers below poverty line who consume below a specified level, as prescribed in the National Electricity Policy may receive a special support through cross subsidy. Tariffs for such designated group of consumers will be at least 50 per cent of the average cost of supply.”

To achieve the objective that the tariff progressively reflects the cost of supply of electricity, the Appropriate Commission would notify a roadmap such that tariffs are brought within around 20 per cent of the average cost of supply.

For agricultural tariffs, the States may set power prices at different levels for different parts of a State depending on the condition of the ground water table to prevent excessive depletion of ground water.

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