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NEW DELHI : The government is planning to extend the time-of-day power tariff system to retail customers, two people aware of the matter said. Currently, this system, under which electricity costs more or less depending on the time of the day, is available for some commercial and industrial users.

The government wants to roll out the system in phases after completing the ongoing smart metering project, the people cited above said on condition of anonymity. Though existing rules permit time-of-day tariff, its implementation will be decided by respective state regulatory commissions, they said, adding the Forum of Regulators, comprising central and state electricity regulatory commissions, has already discussed the matter.

According to one of the two people cited above, the system will initially work for around four months, possibly April-May and September-October, when the demand peaks and the country faces power shortages. “The idea is that one who uses more power during peak demand hours should pay more. If his expenses increase, then he would use some power-consuming appliances such as washing machines during lean demand hours when tariffs are low," the official said.

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The system, under which power consumption during peak-demand hours costs more and during lean-demand hours costs less, aims to lower consumption and load during peak-demand hours. It will also help people who consume less power, largely from the economically weaker sections, lower their power bills by reducing consumption during peak hours. The plan comes after India escaped a major crisis in April and May due to surging power demand and a shortage of coal supplies.

As industries recover from the pandemic, power demand is expected to grow further. India’s peak power demand hit a record 211.856GW on 10 June amid a heatwave. In June, power minister R.K. Singh said demand may stay elevated and that 205GW is the new baseline.

“Smart meters will be a big enabler in implementing this time-of-day tariff system in terms of retail consumers. Consumers will get messages on phone (on consumption behaviour)," a second official said. It is expected to give consumers the freedom to plan their electricity usage as per their needs and resources, he said.

The Centre aims to install 250 million smart prepaid meters for all domestic consumers by March 2025. Data from the National Smart Grid Mission showed 4.82 million smart meters were installed till 12 August.

Queries sent to the power ministry remained unanswered till press time.

“Time-of-day tariff would be very helpful. It helps in flattening the load curve by lowering the load on the grid during peak hours," said Debasish Mishra, partner at Deloitte. Smart meters will be able to capture consumption data which existing analogue and digital meters cannot, he added.

The Centre plans a revamp of the power sector as part of its Vision 2047 to meet the country’s enhanced energy demand and drive economic growth.

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