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Is variable pricing the answer to Delhi’s power woes?

Is variable pricing the answer to Delhi’s power woes?
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First Published: Thu, May 24 2007. 08 50 PM IST
Updated: Thu, May 24 2007. 08 50 PM IST
New Delhi: Residents of Delhi could soon end up paying more for the electricity they consume during peak hours – if the proposed “time of day” (TOD) metering initiative of the Delhi government takes off, that is.
The new metering system is being introduced on a pilot basis in four localities – Rohini, Indraprashtha Extension, Vikaspuri and Paharpur Business Centre in Nehru Place. While no date has been fixed for its launch, if the project is successful in bringing down consumption levels, TOD metering would be extended to the rest of Delhi. ”We will be beginning the pilot programme shortly,” said Haroon Yusuf, Delhi’s power minister.
As a first step towards launching the project, Delhi Transco has collaborated with The Energy Research Institute (TERI) to conduct a survey of power consumers in Delhi in a bid to identify their usage patterns. The results of the survey, which began on 5 May, are expected shortly.
What is TOD metering?
Under this system, electricity consumed during peak hours – currently identified to be during afternoon and in the evening between 7-9pm – would be charged at a higher rate. However, the rates have not yet been fixed as tariffs fall in the domain of the Delhi Electricity Regulatory Authority (DERC). The difference, even if it amounts to a few paise per unit, could create a huge dent in the electricity bills of high-usage consumers, especially those who use energy-guzzling appliances like air-conditioners. Even low-usage consumers could be discouraged from using their appliances during peak hours.
The measure is a part of the government’s strategy to bring down demand during peak hours. This, says the government, is necessary as Delhi faces shortage of power only during peak hours. According to an estimate, peak demand is nearly 25% higher than that during lean hours. ”The problem in Delhi is more of power management than power shortage. The difference between peak and lean demand is 1000 MW,” says Rishi Raj, PRO of Delhi Transco.
Peak power demand has financial implications as well.
Distribution companies have to purchase additional power to meet peak-hour demand, and since this power purchased is only for a few hours, it comes at a very high cost to the distributors. Discoms have had to pay up to Rs7 a unit for power purchased for peak demand, which is thrice as expensive as power purchased on long-term basis.
The government hopes TOD metering will compensate the higher cost of power purchase partially. More importantly, it seeks to alter consumer behaviour so
that people consume more electricity during the leaner hours, when supply is adequate, and minimize usage during the peak, when there is a supply crunch.
Of course, how much the government and the discoms succeed in meeting the second objective remains to be seen. Most people are generally at home during evening, which is when they feel the need to switch on the television, lights, fans, music systems et al. And in the afternoons, when it can become unbearably hot, air-conditioners are put to work in homes, offices, shops and entertainment centres. So, there is limited scope for both domestic and commercial users to reduce consumption.
Industrial users, though, could alter their production schedules and switch on power-intensive machines during off-peak hours, when they would be charged less. The scheme should be more successful in bringing down peak demand in industrial areas,” says an NDPL official.
Domestic consumers, on the other hand, will in all probability dislike the TOD metering as it is sure to bump up their bills. Which is why the government and discoms will have to do a whole lot of convincing before they get them to accept TOD metering.
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First Published: Thu, May 24 2007. 08 50 PM IST