Uniformity Of Electricity Prices In India – Will It Work Out

The central government in various podiums claimed that they were able to bring the ‘One Nation one Tax’ system in the country.

- D Radhakrishna

On similar lines now, demand is being raised at certain levels that electricity prices all across the country atleast for the domestic sector - are made uniform so that the present punch being faced at metropolitan cities is reduced.

Even during the recently concluded elections, electricity prices and its availability were among the main issues. The Schedule 12 of the Concurrent List of the Indian Constitution calls for maintaining uniformity in the policies that are aimed at electricity production. This has been reflected in most states where within states, an uniform approach is maintained with uniform tariff, barring Maharashtra and Gujarat that are supplied by private players as well.

The issues

The market of electricity is dominated by the national grid through its power plants totalling 3,50,000 MW installed capacity. Theoretically, either input material is transported or electricity is transmitted. Other heterogeneous modes of production such as coal, gas, nuclear and renewables also contribute to the supply of the heterogeneous consumer segment which ranges from agriculture to public utility such as railways and roads. The variation of production pricing is assumed by the state on a pooled basis.

At the level of supply, the bulk consumer takes a higher voltage in contrast with low consumer who takes, say 230 volt, but the prices of transmission and wheeling often hike electricity prices that the bulk consumer subsidises. This approach of ‘high consumption, high price’ is disgruntling users. This policy is countered by the policy on agriculture market that gives the responsibility of subsidy to the state.