Tariff Determination
Tariff determination has become transparent and is insulated from the political pressures. ERCs have been official to set terms and conditions for tariff. They are to be guided through factors in which encourage competition, economical use of resources, efficiency, commercial principles, rewards in efficient performance, multi-year tariff (where tariff is set for a few years ahead), etc. Under the multi-year tariff regime, utilities are expected to plan sales and investment3 to 5 years ahead. Multi-year tariff regime should give for tariff path, revenue stream and investment plans of the utilities.
ERCs shall determine tariffs for supply through Gencos to Discoms, for transmission, for wheeling, and for retail sale. They are empowered to fix margins and caps (ceilings floors) for trading and could adopt mechanisms of determining tariff by bidding. Tariff will not be amended in a period of less than a year.
Table: Role of CERC and SERC in Tariff Setting
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CERC
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SERC
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To set:
- Generation tariff for central owned generating companies.
- Generation tariff for Companies supplying power to more than one state.
- Transmission tariff for interstate transmission of power.
Note: Generation and transmission companies will adopt such principles as to earn adequate return.
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To set:
- Transmission tariff within the State.
- Retail distribution tariff within the State.
1. Determine and notify tariff for State Genco with State Govt.
2. Clear all new PPAs.
3. Regulate purchase of power.
Note: Tariff progressively reflects cost of supply at an improving level of efficiency.
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