Uttarakhand Electricity Regulatory Commission (UERC) Introduces 2024 Tariff Regulations For Transparent And Efficient Electricity Pricing

Introduction

On September 17, 2024, the Uttarakhand Electricity Regulatory Commission (UERC) introduced the 2024 Tariff Regulations, aimed at promoting transparency and efficiency in electricity pricing in the state.[1] These regulations, formulated under the authority granted by the Electricity Act, 2003, provide a framework for determining tariffs across various segments, including electricity generation, transmission, and distribution, effective from FY 2025-26 to FY 2027-28. The regulations are part of a broader effort to ensure that electricity pricing in Uttarakhand is both fair and competitive, benefiting consumers and increasing economic growth.

Explanation (Key Points)

1. Scope and Applicability The UERC Tariff Regulations, 2024, extend to the entire state of Uttarakhand. They cover the determination of tariffs for electricity supplied by generating companies to distribution licensees, intra-state transmission, and retail supply of electricity, among others. The regulations also set ceilings for tariffs in certain circumstances, such as during electricity shortages​.
2. Multi-Year Tariff (MYT) Framework The regulations adopt a Multi-Year Tariff (MYT) framework, which spans three financial years from April 2025 to March 2028. This approach encourages long-term planning and cost predictability by setting baseline parameters, including operational and cost standards, for electricity providers.
3. Capital Investment Plans The regulations mandate that generating companies, transmission licensees, and distribution licensees submit detailed business plans, including capital investment proposals. These plans must demonstrate a cost-benefit analysis, detailing funding sources and performance improvement trajectories, ensuring that investments in electricity infrastructure align with the state’s long-term energy needs​.
4. Operational Efficiency and Cost Optimization UERC sets stringent norms for operational efficiency, requiring electricity providers to reduce losses, improve system availability, and optimize maintenance. The regulations emphasize reducing transmission and distribution losses, enhancing collection efficiency, and ensuring power availability for consumers across different categories​.
5. Review Mechanism An annual performance review will be conducted to assess the actual performance of generating companies and licensees against approved parameters. The regulations outline mechanisms for adjusting tariffs based on variations in controllable and uncontrollable factors, with the goal of ensuring that efficiency gains are shared with consumers​.
6. Transparency in Pricing One of the key objectives of the 2024 regulations is to enhance transparency in tariff determination. The regulations require detailed public disclosures, including the publication of approved tariffs in newspapers and online, ensuring consumers have access to essential information regarding electricity pricing​.

Conclusion

The Uttarakhand Electricity Regulatory Commission’s 2024 Tariff Regulations represent an important step towards creating a transparent, efficient, and fair electricity pricing system in the state. By adopting a multi-year tariff framework, encouraging operational efficiency, and ensuring public accountability, these regulations aim to balance the interests of electricity providers and consumers, contributing to the sustainable development of Uttarakhand’s energy sector.

[1]https://uerc.gov.in/Rules%20and%20regulation/UERCRegulations/2024/MYT%20Regulations,%202024/MYT%20Regulations,%202024.pdf