The Indian government has introduced a new ‘time of day’ tariff that allows electricity consumers to save up to 20% on their electricity bills by planning their power consumption more efficiently. Instead of being charged the same rate for electricity throughout the day, consumers will now pay varying rates based on the time of day, according to a statement from the power ministry.
Under the new tariff system, consumers can avoid using electricity during peak hours when power prices are higher. This means scheduling activities like cooking and doing laundry during off-peak hours when the tariff is lower, such as daytime or solar hours. The ‘time of day’ tariff will offer electricity at rates that are 10% to 20% less during solar hours, specified as eight hours in a day by the State Electricity Regulatory Commission. Conversely, the tariff will be 10% to 20% higher during peak hours.
The new tariff system is set to take effect from April 1, 2024, for commercial and industrial customers with a demand of at least 10 KW. For all other categories of consumers, except agricultural consumers, the new rule will be implemented from April 1, 2025. Consumers who already have smart meters installed will benefit from the ‘time of day’ tariff as soon as these meters are in place.
The installation of smart meters will enable the introduction of ‘time of day’ tariff metering at the domestic consumer level, in line with the tariff policy mandate. The government has simplified the rules for smart metering to ensure a smooth transition. Penalties for exceeding the maximum sanctioned load or demand have been reduced to avoid inconvenience or harassment to consumers. No penalties will be imposed based on the maximum demand recorded by the smart meter before its installation. The maximum demand will only be increased if the sanctioned load exceeds at least three times in a fiscal year. Smart meters will be read remotely at least once a day, and the data will be shared with consumers to help them make informed decisions about their electricity consumption.
Union Power and New & Renewable Energy Minister R K Singh described the ‘time of day’ tariff as a win-win situation for both consumers and electricity providers. The tariff structure sends price signals to consumers to manage their electricity load according to the tariff, allowing them to reduce their electricity bills. Singh emphasized that solar power, which is cheaper, will result in lower tariffs during solar hours. The new mechanism will also facilitate better integration of renewable energy sources into the grid, supporting a faster transition to clean energy.
With the implementation of the ‘time of day’ tariff, consumers in India have the opportunity to reduce their electricity bills and contribute to a more sustainable and efficient energy system. By leveraging this tariff mechanism and being mindful of their electricity usage patterns, consumers can take advantage of the cost benefits while supporting the country’s energy transition.
