MoP issues order on reduction in cost of power due to pre-payment

The MoP has issued an order advising state/joint electricity regulatory commissions on the reduction in the cost of power due to prepayment in the entire power value chain. As per the MoP, in case of advance payment even by a day by the discom to a genco and transco or by the consumer to discom, there may be no or reduced requirement of working capital for the genco/transco/discom. However, the present system of rebate does not fully compensate for the reduced requirement of working capital in case of timely/advance payment. Therefore, appropriate commissions need to determine the reduction in generation/transmission tariff in case full or part advance payments are made by discoms. Similarly, retail tariff for consumers should be reduced to the same extent and the norms of tariff determination may be revised.