Electricity consumers across India will soon have the opportunity to save up to 20% on their power bills by planning their electricity usage during solar hours or daytime. The Indian government is preparing to implement a new tariff system called ‘time of the day’ (ToD) tariff. This system involves varying rates for electricity at different times of the day, allowing consumers to adjust their usage and avoid electricity-intensive tasks during peak hours when power rates are higher. This change is part of the government’s efforts to encourage the use of renewable energy sources and expedite India’s transition to a more sustainable energy future.
The ToD tariff system will be applicable to commercial and industrial consumers with a demand of 10 KW and above from April 1, 2024. For all other categories of consumers except agriculture, the new system will come into effect from April 1, 2025. Consumers with smart meters will benefit from the ToD tariff immediately after the installation of such meters.
The introduction of ToD tariff is aimed at providing a win-win situation for both consumers and electricity providers. With separate tariffs for peak hours, solar hours, and normal hours, the ToD tariff sends price signals to consumers, encouraging them to manage their electricity usage based on the tariff rates. By scheduling energy-intensive activities during off-peak hours when the tariff is lower, consumers can effectively reduce their electricity bills.
Under the new tariff system, the rate of electricity during solar hours, which refers to eight hours specified by the State Electricity Regulatory Commission, will be 10% to 20% lower than the normal charges. In contrast, the rate will be 10% to 20% higher during peak hours. This variation in rates aims to reflect the cost disparity between different sources of power generation. Since solar power is cheaper, the tariff during solar hours will be lower. During non-solar hours, thermal, hydro, and gas-based capacity are used, which have higher costs, and this will be reflected in the higher tariff rates during peak hours.
The implementation of the ToD tariff system will also contribute to the better integration of renewable energy sources into India’s power grid. By incentivizing demand during periods of high renewable energy generation, the ToD tariff will help increase the grid integration of a larger quantity of renewable power. This mechanism will improve the management of fluctuations in renewable generation and accelerate the energy transition for India.
Several State Electricity Regulatory Commissions have already implemented the ToD tariff system for large commercial and industrial consumers. With the installation of smart meters, the ToD tariff metering will be extended to domestic consumers as per the tariff policy mandate.
In addition to the ToD tariff implementation, the government has also simplified the rules for smart metering. To avoid inconvenience or harassment of consumers, the penalties for exceeding the maximum sanctioned load or demand have been reduced. Consumers will not be penalized based on the maximum demand recorded by the smart meter before its installation. The load revision procedure has also been rationalized, stating that the maximum demand will only be revised upwards if the sanctioned load exceeds at least three times in a financial year. Smart meters will be read remotely at least once a day, and consumers will receive the data to make informed decisions about their electricity consumption.
The Indian government’s focus on consumer rights and the aim for reliable and quality power services led to the introduction of the Electricity (Rights of Consumers) Rules, 2020. The recent amendments, including the ToD tariff and simplified smart metering provisions, are part of the government’s commitment to empowering consumers and promoting sustainable energy practices.
