MoP issues order on reduction in power cost due to prepayment

The Ministry of Power (MoP) has issued an order advising state/joint electricity regulatory commissions on the reduction in power cost due to prepayment in the entire power value chain. As per the MoP, in the case of advance payment even for a day by the discom to a genco and transco or by consumers to discoms, there may be no/reduced requirement of working capital by the genco/ transco/discom. However, the present system of rebate does not fully compensate against the reduced requirement of working capital in the case of timely/advance payment. Therefore, appropriate commissions need to determine the reduction in generation/transmission tariff in case full or part advance payments are made by discoms. Similarly, retail tariff for consumers should be reduced to the same extent and norms for tariff determination may be revised. The ministry has directed regulatory commissions to develop an appropriate rebate mechanism for discoms that opt for making advance payments. Such rebate or reduction in tariff can also be provided for power purchased from competitively bid generation projects if the procurer and supplier agree to such a mechanism.

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