Time-of-Day Tariff

  • The Ministry of Power recently introduced a Time-of-Day (ToD) rate for electricity, which will be adopted for commercial users next year and for home users in 2025.
  • The purpose of this essay is to explain what ToD tariff is, how it affects consumers, and why it is vital for the electricity sector.

What exactly is Time-of-Day Tariff?

  • Amendments: The government has implemented changes to the Electricity (Rights of Consumers) Rules 2020, including the introduction of ToD tariffs and the rationalisation of smart metres.
  • Tariff structure: Electricity rates will vary depending on the time of day under the ToD tariff. The existing flat pricing scheme will be phased out. The rate may be reduced by up to 20% during the day, benefiting consumers. During the night, however, the tariff will climb by the same amount.
  • Consumer advantages: The ToD tariff allows users to govern and manage their electricity consumption as well as control their bills. It allows them to take advantage of lower tariffs during off-peak hours.

The effect on electricity bills

  • Impact on various households: Bills for tiny working couples that largely use electricity at night are set to rise. Other households, on the other hand, can offset the overnight surge by moving some of their electricity usage to daytime hours.
  • Patterns of power consumption: Power use often peaks in the morning when schools and offices open, late afternoon when children return home, and early evening when air conditioners and heaters are used heavily. The ToD pricing is intended to discourage excessive power use during peak hours.

Appliances that consume a lot of energy

  • Identifying power-hungry appliances: Air conditioners, coolers, refrigerators, heaters, and geysers are the biggest contributors to domestic power use. Washing machines, dishwashers, and microwaves are also large electricity consumers.
  • Alternatives that use less energy: It is worth noting that there are energy-efficient versions of most electrical equipment on the market, which can assist reduce overall electricity consumption.

Infrastructure maturity

  • Smart metres are required: Smart metres are required to execute the ToD tariff. These metres automate metre reading and provide accurate cost estimation, reducing waste. Every 15 minutes, they communicate consumption data to power distribution firms, which is critical for computing ToD charges.
  • Smart metre installation status: The country currently has approximately 6.5 million smart metres installed, with a goal of reaching 250 million by 2026. So far, over 230 million smart metres have been approved.

Advantages for the power sector

  • ToD tariffs and smart metering can improve billing efficiency while reducing transmission and distribution losses.
  • Differing tariff structures for renewable energy: As the share of renewable energy grows, it must be blended with coal-based power, necessitating differing pricing structures. ToD tariffs can efficiently promote this blending.
  • ToD tariff and electric vehicles (EVs): With the anticipated increase in EV adoption, the ToD rate can incentivize consumers to charge their vehicles during off-peak hours, reducing the burden on the power grid.
  • Flexibility for discoms: The ToD tariff allows loss-making distribution businesses (discoms) to alter tariffs in order to solve financial issues.
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