This document summarizes the key points of India's National Electricity Policy and National Tariff Policy. The National Electricity Policy, introduced in 2005, aims to achieve universal access to electricity, meet the growing demand, improve quality and availability, and ensure the financial viability of the electricity sector. It also focuses on issues like rural electrification, generation, transmission, distribution, and private sector participation. The National Tariff Policy, introduced in 2006, provides the framework for determining tariffs and aims for fair returns while protecting consumers. It outlines approaches for tariffs related to generation, transmission, distribution and cross-subsidies.

1. NATIONAL ELECTRICITY
POLICY & NATIONAL
TARIFF POLICY
PRESENTED BY:-Navajyoti Martha
ROLL NO-49
SEC-A

2. NATIONAL ELECTRICITY
POLICY
• Introduced by the Govt. on 6th FEB 2005.
• In order to address the issues the prevailing
issues in the policy prescribed some of the
objectives.
• Also NEP spells out the detail on some of
the challenges ahead under various
headings.

3. Providing universal access in next 5 year for which
significant capacity addition & expansion needed.
Meeting the demand fully by 2012
Bringing improvement in quality of power supply at
reasonable rates.
Increase per capita availability to over 1000 kwh/year
by 2012
Ensuring minimum life line consumption of 365 kwh
per year per household.
Financial turnaround & attainment of commercial
viability of all the entities in the sector.
Protect consumers’ interest.

4. RURAL ELECTRIFICATION
• Creation of REDB.
• Creation of distributed generation & local
distribution system.
• REC acts as a nodal agency at Central Govt
Level & provide fund for network expansion
work.
• Ensures that utilities must recover cost of
supply from all & Subsidy must reach to the
BPL consumers.

5. GENERATION
• On hydro-generation the document initiate the
launch 50 GW capacity.
• It is open ended about the imported LNG based
capacity addition but the focus shifted from liquid
fuel to gas/imported regasified LNG.
• Envisages new capacities to be either at pitheads
or at demand centers.
• Envisages the greater share of Nuclear power
through Private participation & Also from Non-
conventional sources of energy.
• The document spells out the need of “CAPTIVE”
& “STANDBY GENERATION” capacity
contribute to GRID.

6. TRANSMISSION
• Recognizes the need of development National &
Smart grid .
• CTU & STU can do the network expansion
based on present & future need.
• Also state that the IEGC must be specified by
SERCs to have smooth, efficient operation.
• Recognizes the importance of “OPEN ACCESS”
for promoting competition among Generators.
• Recognizes the need of creation of state-of –the -
art SLDCs in line with RLDCs.

7. DISTRIBUTION
• It restates that the States need to restructure the
utilities without burdening them with “past
liabilities” & “extraneous interference”.
• It emphasizes the need of SERCs to allow open
access to consumers having peak need of 1MW .
• Focuses on to use MYT principles to incentivize
the efficiency.
• The document emphasizes on segregation of
Technical & commercial losses through energy
accounting ,use of pre paid meter, use of IT &
SCADA for efficient management of system.

8. RECOVERY OF COSTS &
SUBSIDIES
• It recognizes the need to recover costs of supply .
• Put provision of cross-subsidies for poor
consumers.(Minimum charge-50% of supply)
• If state govt. wish to provide subsidy to any
group consumers ,it should be paid in advanced
without affecting the utility financially.

9. COMPETITION & PRIVATE
PARTICIAPTION
• Envisages Inter-state TRADING by licensees
having license granted by CERC.
• Introduction of intra-state ABT by SERCs.
• Focuses on private sector participation to meet
the investment requirements for the growth of the
sector
• Ensures the minimization of regulatory risks in
order to ensure efficiency through competition.

10. OTHER ISSUES
• Policy document laid emphasis on “ENERGY
CONSERAVATION” & “DEMAND SIDE
MANAGEMENT”.
• The document point out the importance of
TRAINED MANPOWER in the sector.
• It put importance on the co-ordination between
ERCs & state govt to achieve objectives like
capacity addition, strengthening the system,
restoring financial health,improove quality &
accessibility.

11. NATIONAL TARIFF POLICY
• It. was notified by the Central GOVT. on
6th January 2006.
• According to this act CERC & SERCs are
responsible for framing regulations while
guided by TARIFF POLICY.
• It recognizes the requirement of providing
fair & appropriate return on investment to
attract investment in the sector.

12. GENERAL APPROACH TO
TARIFF
• Emphasizes on importance of competition .
• CERC has to notify the rate of return on
equity/capital for GENCOS & TRANSCOS
keeping in view the cost of capital.
• The distribution margin approach should be the
factor of reduction in AT & C losses, cost of
supply & quality.
• It specifies the DEBT-EQUITY norm of 70:30.
• It specifies all tariffs would be under MYT
framework (Features 3-5 year control period).

13. GENERATION TARIFF
• It specifies that ERCs should have time-varying
(peak v/s non-peak) fixed charges for better load
management.
• Also specifies that the PPAs should have adequate
& bankable payment security mechanism.
• Captive generators on the grid should have same
terms as other generating stations subject to ABT.
• It specifies that the SERC fix the percentage of
share of power to be procured on competitive basis
by the distribution licenses from non-conventional
sources of energy.

14. TRANSMISSION TARIFF
• CTU/STUs can undertake the investments in line
with the National plan & CERC would specifies
the norms of capital & operating cost for
transmission lines at at various voltage levels.
• The tariff of the projects to be done by
CTU/STUs would be based on competitive basis
after 5 years or whenever ERCS are satisfied.
• It specifies that metering on the network should
be compatible with tariff.
• Inter state transmission tariff-set by CERC
Intra state transmission tariff-set by SERCs

15. DISTRIBUTION TARIFF
• Policy ensures that ERCs must strike a balance
between the commercial viability of the distribution
licensees & consumer interests.
• It emphasizes on the sharing of efficiency gains
between consumers & licensees through MYT
framework specified in the act.
• Policy ensures that the gap between the required
tariff & current tariffs need to be covered either by
tariff increase/Financial restructuring & Transition
financing.
• SERC should initiate tariff determination on suo
moto in case filing has not been made.

16. • Policy ensures that reduction in the AT & C
losses should not be achieved by denying
revenues for power purchase for 24 hours
supply, Reasonable O & M costs & Capex.
• Actual retail sales should be grossed up based
on Normative T & D losses.
• SERC may specify surcharge based on AT & C
losses , may also encourage area based
incentives / disincentives for the local staff.
• Policy ensures that the metering should be done,
so that it is easier to segregate technical losses
from commercial losses in MYT trajectory.

17. DISTRIBUTION TARIFF &
COST OF SERVICE
• Policy recommend that the state govt should
target direct subsidies than cross subsidies.
• Policy ensures that SERC must take necessary
measures to bring tariff with in +/- 20% of ACS.
• Document stated that the agricultural tariff
should be different for different parts of the state
depending upon the sustainability of the ground
water use.
• Document put stresses on metering of all
consumers.

18. CROSS-SUBSIDY SURCHARGE &
ADDITIONAL SURCHARGE FOR
OPEN ACCESS
• Cross subsidy surcharge=
Tariff applicable to that relevant category consumer-
Cost of the licensee to supply to that category
consumer.
• Policy stressed SERCs that they should bring down
cross-subsidy in a linear manner by 2010-11.

19. • Policy ensures that Wheeling Charge for the
“OPEN ACCESS” consumers would be based on
principles of intra-state transmission & would take
into account the losses at the relevant voltage
levels.
• Tariff policy ensures that ERCs must monitor
trading transactions to ensure that traders don’t
involve in profit making process during the
situation of shortages, So ERCs may fix margin for
this purpose.