Tariff rationalisation is reorganisation of the tariff structure in a way that economy can decide which goods should be necessarily be imported or exported in order to increase productivity of the economy and taking the decisions about the tariffs which are involved while importing and exporting goods. Today, the entire burden of cross-subsidising agriculture finally falls on industrial and commercial users. Electricity was in short supply and ensuring that the marginalised people got it regularly was an unsuccessful effort. There is also a case for subvention in tariffs by way of targeted subsidies to the needy, by the respective state government, but the same should be paid timely which, otherwise, leads to cash flow issues with the utilities. In the next decade or so, not only would the nature of businesses within the sector undergo major changes, but the electricity market would perforce get aligned with the new realities. Over the years, the regulators have been moving towards a rationalisation of the tariff structure. It would be the prime responsibility of the regulator to prepare the sector, mainly consumers, for embracing the expected changes, be it on account of rolling out of smart grids and smart meters, increasing penetration of renewable technologies, net metering and energy storage solutions, substitution of fossil and petroleum fuels in transportation or domestic cooking by electricity. When we talk of tariff rationalisation, this is the real issue. This gives a clear message that as you consume more, you have to pay more. Further, the multiple slabs have created multiple consumer categories and we get a very complex structure, which leads to multiple inefficiencies. We have been going in the opposite direction, charging more for higher consumption and less (or even free) for the smallest consumers. Govt. In sociology, rationalization (or rationalisation) is the replacement of traditions, values, and emotions as motivators for behavior in society with concepts based on rationality and reason.For example, the implementation of bureaucracies in government is a kind of rationalization, as is the construction of high-efficiency living spaces in architecture and urban planning. Tariff definition is - a schedule of duties imposed by a government on imported or in some countries exported goods. A key issue is how to reduce aggregate technical and commercial (AT&C) losses, for which the most important requirement is to have 100 per cent metering. The Electricity Act, 2003 also clearly outlines the role of the regulators – to stabilise, guide and nurture the sector comprehensively. Lowering of retail tariffs through efficiency and realignment of the generation mix. During the six years following the Free Trade Agreement with the United States, Canadian manufacturing exhibited substantial rationalization – a decline in the number of plants accompanied by increases in output per plant. We must have tariffs that vary with time of day and night as well as season. …. Rationalization means organizing something into a logically coherent system. of Pakistan adds subsidies and "tariff Rationalization Surcharge" to make it uniform and notify. We have come across many private hospitals registered as charitable trusts and demanding lower rates. While rationalising the tariff structure is an attractive idea, we will have to live with the reality that each state follows a tariff structure that is more conveniently suited for its social objectives. Tariff rationalization is especially important in promoting the competitiveness of domestic industries. Nevertheless, scope remains for the liberalization and rationalization of tariffs in non-agricultural goods, particularly for the removal of tariff bias, tariff escalation and tariff peaks affecting developing country exports in their major markets. Further, this will discipline those who are supplied below-cost power because they know they are being measured. See more. Rationalize definition: If you try to rationalize attitudes or actions that are difficult to accept , you think... | Meaning, pronunciation, translations and examples There could also be a discount for steady and large purchases made consistently. However, we believe that the proposed move will not only rationalise the slabs but also align tariffs with the cost of supply. We must also recognise that the energy sector in India is currently structured in an inherently inefficient manner. Further, the complexity may prevent consumers from fully responding to tariffs due to the high cost of processing the price information. Further, there is inconsistency in the categorisation of certain consumer segments across states. From the discom perspective, tariff rationalisation will aid in improving discom financials, which are currently riddled with losses, high debt levels with adverse capital structures and weak debt coverage indicators. Cost-reflective tariffs will provide the appropriate price signals to both consumers and utilities and reduce the distortions. While fixing tariffs, the regulator must consider these aspects. Tariff definition, an official list or table showing the duties or customs imposed by a government on imports or exports. He further stated that necessary tariff protection to the local industry is vital for investment in the country, however, it is also imperative to protect the downstream industry. Rationalisation of tariffs will enhance efficiency, stop complicated and inefficient accounting cross-subsidies, ensure demand consistency through the year, improve capacity utilisation in generation and even distribution, and benefit the steady buyer. Rationalization The process of reorganizing and overhauling a company's operations, policies, and anything else needed to make the company more efficient. If a particular consumer or group or industry is to be favoured and supplied free or below-cost electricity, we must identify each such consumer and know how much electricity is to be supplied at those lower rates (or free), and the government must reimburse the discom without delay. The key considerations for tariff rationalisation could include: A realistic assessment of costs of service to various consumer categories at different voltage levels of supply and setting cost-reflective retail tariffs. He further directed Tariff Policy Centre, National Tariff Commission to conduct detailed studies and suggest three years tariff rationalization roadmap initially for Iron and Steel, Plastics, Engineering, Pharmaceuticals, Chemicals and Textile sectors. This document dated June 1999 is provided for the ADB project TA2633 in Indonesia. However, for private hospitals that are run on a commercial basis, there cannot be lower tariffs. redistributed or derived from. We talk about how the percentage of AT&C losses has come down, but in reality we find that the numbers keep fluctuating. The key considerations for tariff rationalisation could include: However, one must realise that, notwithstanding the electricity commissions, the government still has significant regulatory roles and responsibilities. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry. The SERCs should also provide a roadmap to reduce cross-subsidies with the objective of keeping tariffs across categories within 80 per cent to 120 per cent of the average cost of supply (ACS) of a distribution utility. How would the proposed move impact discoms and consumers? The proposed move to reduce slabs would certainly reduce the administrative burden for both utilities as well as consumers. Rationalization definition is - the act, process, or result of rationalizing : a way of describing, interpreting, or explaining something (such as bad behavior) that makes it seem proper, more attractive, etc.. How to use rationalization in a sentence. If this sounds familiar, it may be time to look at SKU rationalization in your business. I'm doing an essay on electricity infrastructure reforms in India and I seriously cannot find a definition for this at least over the internet... just talk about how important it is in balancing subsidy costs or how people hate it. Here, we shed light on the meaning of rationalization, and put forth some examples of the concept to make it easier for you to get well-versed with it. There are five main types of tariffs, protective, prohibitive, specific, ad valorem, and revenue:– Protective Tariff: used to push up the price of imported products as a protective measure against foreign competition, i.e. Against this backdrop, the importance of this issue cannot be less emphasised. The role of discoms as well as consumers would change unbelievably with neither the discoms remaining the sole source of power supply to end-users nor consumers being just consumers. Even though a metering system has been introduced for agriculture, in many states it is not effective and as a result, there is a very large percentage of consumers that are not metered at all. Tariff Rationalization ... NTP (8.4 Definition of tariff components and their applicability) envisages explicitly the emphasis on the ToD Tariff. During the last decade, all the 20 fastest export-growth economies have reduced import tariffs, while in Pakistan the trend has been the opposite with an increase of 11% in import tariffs1. Tariff: A tariff is a tax imposed on imported goods and services. Commercial users can at least pass on a part of  the higher cost to their consumers, although the alarming rate of closure of newly constructed malls and commercial complexes suggests that there is a limit to which such a burden can be borne by this class of users. 173 Size Rationalization and Trade Exposure Of course elasticity effects are not the only possible effect of increased for- eign competition. Unfortunately, electricity is a concurrent subject in our Constitution. But within one category, like hospitals, there are different types of consumers – government, municipal and private. Another issue relates to high tension consumers, that is, consumers with consumption of 1 MW and above, who are the real revenue generators. Rationalize definition: If you try to rationalize attitudes or actions that are difficult to accept , you think... | Meaning, pronunciation, translations and examples A realistic assessment of costs of service to various consumer categories at different voltage levels of supply and setting cost-reflective retail tariffs. (Note: Arun Srivastava’s views are his personal views as a power professional and may not necessarily be aligned to Tata Power’s views.). As soon as consumption crosses 200 units, consumers move into the next slab for which the tariffs are higher. What is tariff rationalization? Rationalization is thought to be more widespread than a reorganization; it may involve closing some operations while expanding others. The basic rationale in tariff design has to be to reflect the cost of service each consumer category and at the same time provide reasonable returns to the utility and incentivise efficient performance. Since government and municipal hospitals cater to socially and economically disadvantaged patients,  their tariffs are kept low. tariff definition: 1. a charge or list of charges either for services or on goods entering a country 2. a charge or…. In India, the tariffs have been generally distorted. He asked to remove tariff anomalies in tariff structure through analysis of value chains. This sort of reorganization may lead to an expansion or reduction in … If a large category like agriculture is not metered, the AT&C numbers will not be reliable. Learn more. Such developments would have a widespread impact in the long run for all stakeholders. World over, including in India, the regulator is expected to take a neutral position, balancing the interests of all stakeholders. Please leave this field empty. Your Company Name, Wind power development in the country started in 1986, with the setting up of the first wind, A growing number of industrial and commercial consumers, who had long been reeling under high utility tariffs, US-based solar module manufacturer First Solar entered the Indian market in 2010 and has since become one, The Telangana State Electricity Regulatory Commission (TSERC) has notified draft TSERC (Deviation Settlement Mechanism and related matters) [...], Power Finance Corporation (PFC) plans to sell bonds worth $1.4 billion to individual investors. Please leave this field empty. TA 2633-: Electricity Tariff Rationalization Study; Technical Assistance Special Fund: US$ 353.00 million Approval: 27 Aug 1996: Project Data Sheets (PDS) contain summary information on the project or program. In real life, they cater to only affluent patients and the quotas for poor patients are never met. Summary of Change. The effectiveness of the regulatory system would depend on the convergence of approaches between these two sets of regulators. One must also bear in mind that in most cases, the regulators in India regulate government owned and managed entities, which itself is challenging. Rationalize definition, to ascribe (one's acts, opinions, etc.) one tariff line will affect other industries. This revision implements increases to pay schedules, to “dynamic supplements,” and the adjusted date for terminating these pay schedules in accordance with Tariff Agreement Also, the National Tariff Policy calls for a progressive revision in tariffs for judicious recovery of the cost of service such that cross-subsidy is reduced and is within +/- 20 per cent of ACS. Tariff rationalisation would possibly do away with high tariffs and cross-subsidisation by the commercial/industrial segments, which partly cover for the unbilled power/commercial losses. (noun) The aim here is to complet… Tariff rationalisation would bring in greater transparency for consumers and provide better control on operations for discoms. Het systeem is compatibel met de EU-eisen en biedt flexibele en uitgebreide functionaliteit, waardoor ook de nationale regelgeving kan worden toegepast. With a view to simplifying electricity tariffs, the power ministry recently constituted a committee for developing a framework for the creation of tariff categories that enable uniform and homogeneous electricity tariff categorisation across the country. This has made a heavy capital essential service into a highly uneconomic one, with no surplus generated for regular maintenance and investment. Only then would the tariff rationalisation exercise make sense. Encouraging the adoption of advanced technologies at various levels through an appropriate regulatory framework and market structure. Sector experts share their views on how the tariff structure can be rationalised and the key considerations in doing so…. Unless otherwise stated, all content is In real life, tariffs are a state subject and the regulators will be guided by what the political powers in the states want them to do. Ensuring high reliability and standards of service. Rationalization The process of reorganizing and overhauling a company's operations, policies, and anything else needed to make the company more efficient. A vast majority, if not all, consumers would also turn into generators of some scale and size, reducing their dependence on discoms to only a fraction of their total power requirement. 5 • Recognition of the national interest in tariff reform is critical in order to avoid the folly of entering multilateral, regional and bilateral trade negotiations with the false view of tariff This, along with the gradual reduction in cross-subsidies, would encourage industrial and commercial consumers to increase their power consumption from discoms, rather than opting for supply under open access. This requires complicated accounting and is not the business of the discom. Also, the situation on the ground varies from state to state. Timely tariff revisions will go a long way in addressing the revenue gap faced by the utilities, which is prudently allowed by the regulator by way of tariff revisions/creation of regulatory assets. Rationalization definition is - the act, process, or result of rationalizing : a way of describing, interpreting, or explaining something (such as bad behavior) that makes it seem proper, more attractive, etc.. How to use rationalization in a sentence. The Meaning of Rationalization in Psychology Explained With Examples. Tariff Subsidy and Surcharge NEPRA Determined Tariff Subsidy and Surcharge NEPRA Determined Tariff … What is encouraging the government to go in for tariff rationalization is the response to the Thai and Japan offers which offered a discounted tariff rate. Too many tariff slabs, which may not necessarily reflect the cost of supply, lead to much higher administrative costs for monitoring consumers. to causes that superficially seem reasonable and valid but that actually are unrelated to the true, possibly unconscious and often less creditable or agreeable causes. A common template for industries and commercial users may be possible across the states. If we take out the assured returns on deployed equity and the taxation components, there is hardly any room left for the regulator for tariff manoeuvring. Political economy of state-owned utilities needs to be acknowledged and viable political solutions need to be found. This is the time to make price lists more sensible. India’s current consumer tariff structure is a highly complex one, characterised by numerous categories and tariff slabs across various states. the purpose is to help domestic suppliers compete more effectively in the home market.– Prohibitive Tariff: the tax is so high that it makes an import far too (prohibitively) expensive. It will also augur well for the country in terms of ensuring long-term energy security and a clean, sustainable environment. TV) (Tariff Agreement, July 2, 1997, Protection From Rationalization Measures, Termination of Employment, and Income Protection (Protection Agreement)). STRATEGY OF TARIFF RATIONALIZATION 16 CHAPTER 5 RATIONALIZATION OF DOMESTIC TAXES 18 CHAPTER 6 USE OF OTHER INSTRUMENTS 20 6.1 Import Margin Requirements 20 6.2 Exchange Rate Policy 22 6.3 Use of Tariff Quotas 23 6.4 Some Concerns 24 CHAPTER 7 INSTITUTIONS AND LAWS 25 7.1 Safeguards 25 7.2 Anti -Dumping 29 7.3 Special Provisions 31 countries, which have undertaken programmes of structural reform, tariff rationalization and trade liberalization, was faster than the others. This also gives a clear signal to consumers that they should save energy and opt for five-star-rated appliances. This material may not be published, broadcast, rewritten, We find that the bilateral tariff reductions had opposing effects on scale. Rationalization as a defense mechanism is similar to rationalization as a logical fallacy. The hue and cry over the increase in the prices of petrol, and attributing it to the government is not just. This is so because industries have to cross-subsidise agriculture. It involves attempting to justify an event or action that doesn't make sense, or that is known to be harmful by describing the event or action as the result of a plausible system or chain of events. There appear to be some misperceptions about the, recent tariff rationalisation of electricity. According to [...], Falling tariffs and capacity growth augur well for segment, Industrial and commercial users turn to short-term power market, “Significant potential for thin-film deployment”, TSERC notifies draft DSM Regulations, 2020, PFC to sell bonds worth $1.4 billion to individual investors. This would, in turn, improve the revenue prospects for the utilities and reduce their losses. Learn more. Another key issue that must be taken into account before rationalising tariffs is that discoms should adopt advanced meter reading or automatic meter reading and eliminate the involvement of any human element. What does rationalization mean? Tariff rationalisation: myth and reality. Objectives for rationalization Based on this understanding of the problem, the following objectives for rationalization are implied, all of which are consistent with the New Trade Policy. The power sector in India is at the cusp of an unprecedented transformation, essentially driven by technology. Today, for industries, the tariffs are really high. Rationalisation cannot be done to the extent that it is being talked about. From the consumer perspective, the rationalisation and simplification of the tariff/slab structure would enable transparency, better compliance and reliable power supply, and may well yield consumption. For example, for domestic consumers, there is a slab for those who consume only 100-200 units. This proposal was also discussed at the state power ministers’ conference in May 2017. He said rationalization of electricity tariff to promote businesses in the country especially in wake of current difficulties being faced due to COVID-19, was need of the hour adding that the government was keen to take necessary steps in consultation and cooperation of the IPPs. As per the survey, the current tariff structure in most of the power distribution companies is complex with myriad rates/categories for different types of consumer classes. Tariff structuring should also aim at addressing areas like smoothening the demand curve (through time-of-day [ToD] metering) and putting in place a framework of penalties for erring consumers, with incentives for law-abiding/punctual consumers. Enhanced focus on efficiency in service delivery through appropriate structural realignments and operational cost optimisation. For example, in Chhattisgarh, we have a separate tariff category for mining; however, such a category may not be relevant in other states. 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