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Power reforms: NITI bats for promoting auctions, discoms privatisation, independent regulators

Government think tank Niti Aayog in its strategy document Wednesday suggested for the power sector a plethora of reforms like promoting smart grids, auctioning of energy, privatisation of discoms, payment of subsidies by direct benefit transfer and introducing 100 per cent metering for electric supply, etc. The Aayog unveiled ‘Strategy for New India @75’ for New India, which defines clear objectives for 2022-23 in a detailed exposition of 41 crucial areas and suggests the way forward for achieving them. It made a case for promoting smart grids and smart meters and also said that all Power purchase agreements (PPAs) including those with state generation companies (GENCOs) should be based on competitive bidding. According to the strategy document, privatising state distribution utilities and/or the use of a franchisee model will reduce aggregate technical and commercial (AT&C) losses and discoms (power distribution firms) may adopt a franchisee model for its retail business in rural areas and stipulate a minimum level of performance parameters, including the use of decentralised generation sources and storage systems for local reliability and resilience. Aayog said that an upfront subsidy per acre of land through direct benefit transfer (DBT) may be considered instead of providing separate subsidies for fertilisers, electricity and crop insurance, etc. It also suggested promoting use of solar pumps for agriculture and said that local discoms should buy surplus power from farmers. About open access, the Aayog said it is also necessary to remove high open access charges and government should actively promote cross-border electricity trade to utilize existing/upcoming generation assets. It also pitched for introduce time-of-day tariff to promote the use of renewable energy and performance-based incentives in the tariff structure. The Niti Aayog also made a case for promoting mandatory use of LED and replacement of old appliances in government buildings with five-star appliances. It also asked to widen and deepen the perform, achieve and trade (PAT) programme, make Energy Saving Certificate (ESCert) trading under the PAT scheme effective by ensuring strict penalties against defaulters. For the MSME sector, the Aayog said that the BEE should develop cluster-specific programmes for energy intensive industries to introduce energy efficient technologies. It said that the Forum of Regulators and State Electricity Regulatory Commissions (SERCs) should provide for lower heat rate requirements for new power stations.

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