Abstract: This paper examines the nature of rural electricity tariffs existing in India and finds that in most cases, there is no special treatment of the rural consumers for tariff purposes, except for agricultural use. There is need for distinct rural electricity tariffs to reflect the costs of supply and to account for targeted subsidies for the rural areas. The factors to be considered for setting up distinct rural electricity tariffs are discussed. These include issues related to subsidy and financial viability of rural electricity supply and the constraints for setting distinct rural tariffs in the Indian context. Separate electricity tariffs…for the rural areas could be justified on the basis of cost and quality of supply, better accounting of financial resources, and other social parameters. However, information constraints, political acceptability, and regulatory management of such spatial tariffs may be difficult. There is need for a holistic treatment of the issue of rural electrification and electricity tariffs as opposed to the piecemeal approach followed so far.
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Abstract: Establishment of independent regulatory commissions is the central element of the power sector reform in India. Incomplete information is a major difficulty that Indian regulators face while making decisions. This paper identifies information inadequacy under three broad categories: transaction related, accounting related, and performance related. Problems in each of these categories are analysed both for transmission licencees and distribution licencees. It also discusses the approaches taken by the Indian electricity regulators for decision-making in a world of incomplete information and the steps taken to improve the situation. We argue that the regulatory decision-making under information constraints has greatly affected the…finances of the regulated utilities and the privatization process. Finally, we suggest some steps such as a standardized accounting policy and regulatory information system for improving information availability.
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