New tariff system offers varied rates based on time of day, encouraging efficient power consumption.
The Indian government has introduced a new ‘time of the day’ (ToD) tariff system, enabling electricity consumers to save up to 20 percent on their electricity bills.
The ToD tariff system offers different rates depending on the time of day, allowing consumers to adjust their power consumption and avoid using electricity during peak hours when prices are higher. By scheduling activities such as cooking and laundry during off-peak hours, consumers can take advantage of lower tariffs.
According to a statement from the power ministry, the electricity rate during solar hours (eight hours specified by the State Electricity Regulatory Commission) will be 10 to 20 percent lower than normal charges, while peak hours will see a 10 to 20 percent increase in rates. Starting from April 1, 2024, the ToD rate will be applicable to commercial and industrial customers with a demand of at least 10 kW. For all other consumer categories, excluding agricultural consumers, the new tariff system will take effect from April 1, 2025.
Consumers who already have smart meters will immediately benefit from the ToD tariff system once these meters are installed. Instead of a flat rate throughout the day, the price of electricity will vary based on the time of day, promoting efficient load management. Union Power and New & Renewable Energy Minister R K Singh highlighted the advantages of the ToD tariff system, stating that solar power being cheaper will result in lower tariffs during solar hours. Singh emphasized that the ToD tariffs send price signals to consumers, enabling them to manage their electricity consumption effectively and reduce their bills.
The implementation of the ToD tariff system will lead to better integration of renewable energy sources into the grid, facilitating India’s transition to cleaner energy. Most State Electricity Regulatory Commissions have already introduced ToD tariffs for large commercial and industrial consumers. To support this new system, the government has simplified smart metering rules and reduced penalties for exceeding the maximum sanctioned load or demand. Consumers will not be penalized based on the maximum demand recorded by the smart meter before its installation.
Smart meters will be read remotely at least once per day, and the data will be shared with consumers to help them make informed decisions about their electricity consumption. The government aims to prioritize consumer rights and provide reliable and high-quality power services, as stated in the Electricity (Rights of Consumers) Rules, 2020, which were implemented on December 31, 2020.