Electricity Pricing and the Willingness to Pay for Electricity in India

Electricity Pricing and the Willingness to Pay for Electricity in India Current Understanding and the Way Forward Bigsna Gill I Sonakshi Saluja I Debajit Palit The Energy and Resources Institute Electricity Pricing and the Willingness to Pay for Electricity in India I 1 © The Energy and Resources Institute (TERI), 2017 ISBN 978-93-86530-08-0 This publication may be reproduced in whole or in part a. [...] The need for this study emerged in the backdrop of the structural changes that are currently underway to ensure the viability of electricity distribution companies (discoms) in India, specifically to understand how much consumers would be willing or able to pay for electricity services, in favour of tariffs that reflect the ‘cost to serve’, and whether such willingness to pay alone can fill the re. [...] 17 The Government of India has however launched the UDAY scheme in 2015 to shift a large component of the debt from the discoms to the state government, which is expected to partially reduce the discom’s losses due to interest burden. [...] 2.3 Willingness to Pay, Existing Tariffs and Discom Losses 2.3.1 Electricity Sales and Revenue Shares To understand the extent to which consumer’s willingness and ability to pay more for electricity services can contribute to a reduction in the revenue losses of distribution companies, an overview of the share of sales and corresponding revenues across major consumer groups was taken for the year. [...] Electricity Pricing and the Willingness to Pay for Electricity in India I 23 ANNEXURES ANNEXURES Annexure 1: Research Framework The studies and surveys covered under the project were selected in the context of the ‘willingness to pay’ approach, that investigates the value assigned to electricity services based on consumer categories (domestic, commercial, industrial, agricultural, etc.), location.