One country, one grid, the country is preparing to switch to the same frequency and the same electricity price. The Union Ministry of Power has prepared a draft plan to standardize electricity tariffs across the country. The plan document was submitted to the states including Kerala for comment. The Center is targeting a scheme similar to making mobile phone call and data rates competitive.
It was commissioned in 2013 as the ‘National Grid’, amalgamating the country’s five grids. This is similar to bringing the country to the same price. At present, the price of electricity in each state is determined by the cost of purchasing power from power generating companies and the power generated by the respective states. The average price of electricity is Rs 3 per unit. Up to Rs 6 should be paid for electricity obtained through long-term contracts. In Kerala, the cost per unit of electricity consumed is Rs 6.05 per unit. The new system is expected to reduce the price by at least one rupee per unit.
If the concept of uniform pricing is to be implemented across the country, states will have to cancel long-term contracts for outsourced power. Many of the contracts have a term of 15-40 years. The states also have agreements with central power plants. The disadvantage of such agreements is that no matter how low the price of electricity in the market, the price specified in the contract will have to be paid. These should be canceled and replaced with power exchanges to meet the daily requirement of electricity. Each state is already buying their depleted power from power exchanges.
When the same price scheme is implemented, power generation companies will be forced to terminate their contracts with the states and sell only through power exchanges. Power exchanges will change, similar to the stock market. All available electricity in the country will be recorded in the Power Exchange. The power required for each state can be scheduled one day in advance and purchased. The maximum price will be determined by the center. Customers can go there whichever company records the least per unit. With this, the rest of the companies will have to lower their prices. As all the states have domestic power generation, it is not possible to increase prices in excess of the limit. The Center itself will initiate review of contracts for implementation of the scheme. In the first phase, from April 2022, states will review contracts to purchase power from National Thermal Power Corporation (NTPC) plants. The power of these plants will also be sold through power exchange.