Smart metering amendment in India sparks shift

India implements a dynamic Time of Day (ToD) tariff system for electricity, enhancing renewable energy integration.

The Government of India has made two changes to the existing power tariff system through an amendment to the Electricity (Rights of Consumers) Rules, 2020. These changes include the introduction of the Time of Day (ToD) Tariff and rationalising smart metering provisions.

Introduction of Time of the Day (ToD) tariff

The ToD Tariff system entails a variation in electricity charges based on the time of day rather than a fixed rate throughout. During the solar hours, which is a specified duration of eight hours per day determined by the State Electricity Regulatory Commission, the tariff will be 10-20 percent lower than the normal rate. Conversely, the peak-hour tariff will be 10-20 percent higher. The ToD tariff will apply to Commercial and Industrial consumers with a maximum demand of 10 KW and above starting from April 1, 2024. It will be implemented for all other consumers except agricultural consumers from April 1, 2025. The Time of Day tariff will be effective immediately after installing smart meters for consumers who have them.

R. K. Singh, the Union Power and New & Renewable Energy Minister, stated that the ToD system benefits consumers and the power system. The separate tariffs for peak hours, solar hours, and normal hours send price signals to consumers, enabling them to manage their load based on the tariff. Consumers can reduce their electricity bills by being aware of and effectively utilising the ToD tariff mechanism. As solar power is cheaper, the tariff during solar hours will be lower, providing an advantage to consumers. During non-solar hours, thermal, hydro, and gas-based power generation, which are more expensive, are utilised, reflected in the Time of Day Tariff. Consumers now have the opportunity to plan their consumption to reduce power costs by conducting more activities during solar hours when the rates are lower.

Furthermore, the ToD mechanism will promote better grid integration of renewable energy sources and facilitate a faster energy transition for India. ToD tariff will further aid in managing fluctuations in renewable energy generation, incentivise increased demand during high renewable energy generation hours, and enhance the integration a larger quantity of renewable power into the grid.

Rules regarding amendments made in the smart metering provision

The government has simplified smart metering rules while reducing penalties for exceeding the sanctioned load. Under the amended provision, consumers will not be penalised based on the smart meter’s maximum demand recorded before installation. The maximum demand will only be revised if the sanctioned load has been exceeded at least three times in a financial year. Additionally, smart meters will be read remotely once daily, with the data shared with consumers to make informed decisions about electricity consumption. These amendments align with the government’s efforts to empower consumers, ensure a reliable 24X7 electricity supply at an affordable cost, and create an investment-friendly environment in the power sector.

Time of Day (ToD) tariff is globally recognised in the electricity industry as an important Demand Side Management (DSM) measure. It incentivises consumers to shift a portion of their electricity usage from peak times to off-peak times, thereby improving the system load factor by reducing demand during peak periods. Several statutory provisions, including the Tariff Policy of 2016, the Electricity Act of 2003, and the National Electricity Policy of 2005, already exist to enable and promote the implementation of the ToD tariff.