National tariff policy:
The Central Government notified the National Tariff Policy on January 6, 2006, for the power sector in line along with the Section 3 of the EA, 2003. With the announcement of the National Tariff Policy, there is greater clarity on the broad principles to be followed for tariff determination. The Central Electricity Regulatory Commission and State Electricity Regulatory Commissions should be guided through the tariff policy in fixing tariffs for generation, transmission and distribution. It is significant to mention in which this policy does not curb the role of Regulators. It only sets broad guidelines for them and gives them sufficient room and independence to operate inside these parameters. The Policy firmly establishes and separates the domain of the Government and Regulator. It moves the CERC centre stage and makes it responsible for evolving consistent process and practices in tariff setting; it also makes the process more transparent for Regulators.
The Regulatory Commissions would put a system of independent scrutiny of financial and technical data submitted through the licensee. They have also been known as upon to encourage suitable local area based incentive and disincentive schemes for the staff of the utility linked to reduction in losses. Third party verification of energy audit results is to be used to impose area-specific surcharge for larger losses. Greater transparency and nurturing consumer groups will be the key concept of regulatory processes.