Government Sets Standards for Electricity Distribution from Central Pool to States and UTs

10 Apr 2023

Electricity from the central pool will not be allocated to states and UTs which will impose taxes on clean energy projects, impede the inter-state flow of power and have not cleared subsidy dues on electricity tariff, according to an official order.The Ministry of Power in an office order also stated that the power from the central pool will not be allocated to those states which have regulatory assets.

Regulatory assets come into existence when power regulators acknowledge that the tariffs imposed on electricity consumers do not adequately cover the power purchase costs of distribution companies (discoms).Certain aspects will be examined whenever a request will be received from any state/union territory (UT) for allocation of power from the unallocated quota of Central Generating Stations, the order dated March 31, 2023, said.

The ministry will take into account non-creation of regulatory assets and timely payment of subsidy declared, if any, in the consumer tariffs by the state government to distribution utilities.

Lastly, whether any tax/cess has been imposed by the state concerned particularly on hydro-power or on renewable energy projects which have the potential to obstruct the inter-state flow of electricity, it said adding ”allocation of power to a state/UT would be strongly disincentivised if it is found violative in any of the above criteria.” The Ministry of Power allocates power generation capacity to states from time to time from its pool of unallocated quota in Central Generating Stations (CGS).

Priority will be given to the allocation of such power from unallocated quota to such states which adhere to financial discipline and refrain from the imposition of tax/duties on flow of power to other states, the order said.