Page 4 - Charging Power - Understanding Electricity Pricing and the Willingness to Pay for Electricity in India
P. 4
revenues is just 9%. Industrial consumers on the other hand of these states the industrial consumers paid considerably
consume 30% of total electricity units and generate 42% of higher tariffs. Sector stakeholders also expressed concern
total revenues. on the degree of cross-subsidization, and the need for a
clear policy road map on cross-subsidies at the state level,
A state-wise per unit average price comparison shows especially one to limit industrial cross-subsidy and replace
that primarily agricultural states, such as Punjab, Haryana, agricultural power subsidies with more direct and better-
Uttar Pradesh, Tamil Nadu, and Madhya Pradesh were targeted subsidy transfers.
charging very low or no electricity tariffs to farmers. In all
Major Recommendations
Prioritize agricultural electricity subsidy reforms, especially in the states of Punjab, Haryana, Maharashtra, Karnataka,
and Madhya Pradesh to offset the heavy cross-subsidization
Initiate reforms in the domestic sector to justify tariff rises, especially in Bihar, Tamil Nadu, and Uttar Pradesh. For
example, invest to improve the availability, reliability, and quality of supply, and at the same time improve the operational
efficiency of discoms
Rationalize tariffs across the electricity value chain based on evidence, to allow discoms to charge cost-reflective
tariffs. For example, subsidy reforms that ensure services can be afforded by the poorest without creating perverse
incentives; move to direct benefit transfers rather than power subsidies
Create awareness and public education on the costs of energy generation, the need for investment to improve service
levels, and the benefits of energy efficiency to support the transition to cost-reflective pricing
Undertake studies at the state level on tariff schedules to establish how tariffs can be simplified and consolidated to
improve revenue generation, transparency, and reduce transaction costs
Electricity needs to be considered as a service independent of its source. On-grid or off-grid, the best-suited
infrastructure should be employed to provide reliable electricity, affordable and sustainable energy for all at the same
price and at the same level of service
Develop ‘willingness to provide’ training for supply-side stakeholders (specifically discoms) to change the attitudes
and skills of staff to increase their willingness to ensure the provision of reliable, affordable, and sustainable electricity
for all, especially in rural areas.
For more information, contact:
Bigsna Gill
Associate Fellow, Centre for Impact Evaluation & Energy Access
Social Transformation
The Energy and Resources Institute (TERI) Tel: 24682100 or 41504900
Darbari Seth Block, Fax: 24682144 or 24682145
IHC Complex, Lodhi Road, Web: www.teriin.org
New Delhi- 110003 E-mail: bigsna.gill@teri.res.in
This material has been funded by Department for International Development, Government of the UK; however the views
expressed do not necessarily reflect the UK government’s official policies.
The Energy and Resources Institute
consume 30% of total electricity units and generate 42% of higher tariffs. Sector stakeholders also expressed concern
total revenues. on the degree of cross-subsidization, and the need for a
clear policy road map on cross-subsidies at the state level,
A state-wise per unit average price comparison shows especially one to limit industrial cross-subsidy and replace
that primarily agricultural states, such as Punjab, Haryana, agricultural power subsidies with more direct and better-
Uttar Pradesh, Tamil Nadu, and Madhya Pradesh were targeted subsidy transfers.
charging very low or no electricity tariffs to farmers. In all
Major Recommendations
Prioritize agricultural electricity subsidy reforms, especially in the states of Punjab, Haryana, Maharashtra, Karnataka,
and Madhya Pradesh to offset the heavy cross-subsidization
Initiate reforms in the domestic sector to justify tariff rises, especially in Bihar, Tamil Nadu, and Uttar Pradesh. For
example, invest to improve the availability, reliability, and quality of supply, and at the same time improve the operational
efficiency of discoms
Rationalize tariffs across the electricity value chain based on evidence, to allow discoms to charge cost-reflective
tariffs. For example, subsidy reforms that ensure services can be afforded by the poorest without creating perverse
incentives; move to direct benefit transfers rather than power subsidies
Create awareness and public education on the costs of energy generation, the need for investment to improve service
levels, and the benefits of energy efficiency to support the transition to cost-reflective pricing
Undertake studies at the state level on tariff schedules to establish how tariffs can be simplified and consolidated to
improve revenue generation, transparency, and reduce transaction costs
Electricity needs to be considered as a service independent of its source. On-grid or off-grid, the best-suited
infrastructure should be employed to provide reliable electricity, affordable and sustainable energy for all at the same
price and at the same level of service
Develop ‘willingness to provide’ training for supply-side stakeholders (specifically discoms) to change the attitudes
and skills of staff to increase their willingness to ensure the provision of reliable, affordable, and sustainable electricity
for all, especially in rural areas.
For more information, contact:
Bigsna Gill
Associate Fellow, Centre for Impact Evaluation & Energy Access
Social Transformation
The Energy and Resources Institute (TERI) Tel: 24682100 or 41504900
Darbari Seth Block, Fax: 24682144 or 24682145
IHC Complex, Lodhi Road, Web: www.teriin.org
New Delhi- 110003 E-mail: bigsna.gill@teri.res.in
This material has been funded by Department for International Development, Government of the UK; however the views
expressed do not necessarily reflect the UK government’s official policies.
The Energy and Resources Institute
