New power tariffs: Govt wants you to save money during the day, but pay more at night

The government has announced new electricity rules that will allow for cuts in power tariffs of up to 20 per cent during the day and increases of up to 20 per cent during peak night hours.

This is being done in an effort to encourage people to use electricity during off-peak hours, when demand is lower. The government hopes that this will help to reduce peak load and improve grid stability.

The new tariffs will come into effect from April 2024 for commercial and industrial consumers and a year later for most other consumers except those in the agricultural sector, according to a Reuters report.

The new rules are intended to encourage price-conscious consumers to run their air conditioners for fewer hours at night, reducing the load on overworked fossil-fuel power plants and lowering the likelihood of overnight power outages. It would also help in reducing pollution.

To put it into context, during the fiscal year ended March 2023, India saw its worst electricity shortages in six years, as scorching heat and a boom in economic activity meant supply could not keep up with demand, which climbed at its quickest rate in 33 years.

"Since solar power is cheaper, the tariff during the solar hours will be less, so the consumer benefits," Power Minister R. K. Singh said in a statement.

"During non-solar hours, thermal and hydro power as well as gas-based capacity is used - their costs are higher than that of solar power - this will be reflected in time-of-day tariff," he said.

The new power tariffs are likely to benefit consumers who can shift their energy usage to the daytime. For instance, households that can run their refrigerators, washing machines and other equipments during the day could save money on their electricity bills.

However, consumers who use more energy at night, such as those who run air conditioners, could see their bills go up. The government hopes that this will encourage people to use electricity during off-peak hours, when demand is lower. This will help to reduce peak load and improve grid stability.

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