Dynamic pricing for power from 2025; higher rates at peak hours

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New Delhi: The system of charging different rates for power at different times of the day would come into effect across the nation by April 1, 2025. The Centre has sought the States’ opinion on the draft amendment bill regarding the proposed Time of Day (TOD) tariff system.

As per the TOD system, different rates are applicable for use of electricity at different time of the day.

Once the TOD system is implemented, the charges would be more for the peak hours from 6 pm to 10 pm — when the consumption is the highest — and it would be less for the daytime.

The rates would be at least 10 per cent higher for domestic consumers. For commercial and industrial consumers, the rates would be higher by at least 20 per cent. For all consumers, the rates would be less by at least 20 per cent of the usual charge during day time, when solar power generation also happens.

The Centre’s draft direction is to switch to the TOD tariff once the ‘Smart meter’ system – which ensures advance payment for power – is implemented.

The rate and the peak hours would be decided by the respective State Regulatory Commissions. In short, to cut down on the power bill, the consumption during the night time will have to be reduced.

In Kerala, the TOD system is in place for domestic consumers who have a consumption of more than 500 units of power and commercial consumers who use more than 20 Kilo Watts of power. These consumers are to pay more than 50 per cent higher charges than usual for peak-hour consumption.

Smart meter to track consumption
The time-based billing is possible only on the smart meter. The Centre has made it mandatory to install smart meters across the nation by March 31, 2025.

The commercial, and industrial consumers who have a requirement of up to 10 kilowatt would come under the TOD tariff slab by 2024 April 1. All electricity consumers, except farm connections, would switch to the TOD billing system by April 1, 2025.

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