Telecom operators dial govt for power reforms as costs surge

Telecom operators and telecom tower companies have urged the Central government to cut electricity tariffs, ensure 24×7 power supply, speed up smart meter installation, and make it easier for them to use renewable energy.

Currently, 35% of the telecom industry’s operating expenditure (opex) is spent on electricity costs. Telecom tower companies typically pass on energy-related costs to telecom operators.

The companies attribute the high electricity costs to commercial rates, which are meant for shops. Telecom operators have been urging the government to charge them industrial rates, which are cheaper and meant for factories and industries.

“This huge burden (of) OPEX due to high commercial tariff impacts expansion of industry to rural areas and indirectly impacts the growth and economy of the developing country,” the Cellular Operators Association of India (COAI) said in a letter dated 30 June to Union power minister Manohar Lal. The association represents private telecom operators and tower companies.

Telecom operators have been in constant dialogue with the Centre and state governments, seeking classification under the industrial power tariff category. An industry executive said the latest communication was sent a week ago.

Telecom operators have also flagged the issue of states not implementing the Union government’s Green Energy Open Access (GEOA) rules, which allow consumers using 100 kW or more of electricity to directly buy renewable energy from various producers. The rules, introduced in 2023, cover telecom operators.

A state issue

The executive mentioned above, declining to be identified, said the matter mainly rests with state governments, as state electricity regulators must implement green energy open access rules and decide on the tariff reclassification.

So far, only a few states, including Maharashtra and Himachal Pradesh, have accepted the demand for operators to charge them cheaper industrial electricity tariffs, the executive said.

“Despite 29 states/UTs (union territories) having notified the GEOA Rules 2023, several states/UTs still do not allow load aggregation/eligibility for LT (low-tension connection) consumers,” COAI said in its letter.

The industry body added that most states have not decided on the transmission and wheeling charges that LT consumers have to pay to access green energy, making it hard for telecom operators to plan or budget for these fees.

LT connection refers to low-voltage electricity supply for everyday use typically used in homes, small businesses, and small industries. Individual telecom towers use LT connections because their electricity requirement for running telecom equipment is relatively small.

As part of the National Broadband Mission 2.0, the Union government has set a target for the telecom industry to meet 10% of its power requirement for mobile towers through sustainable energy this financial year, and 30% by 2029–30.

Having renewable energy sources for telecom towers will also ensure an alternative power supply and affordability of telecom services, industry executives said.

“The issue of whether the telecom sector should be categorised under industrial tariffs or commercial tariffs has been going on for a while. However, the power ministry or department of telecommunications cannot do much in this as the tariff for different categories is determined by the State Electricity Regulatory Commissions,” said Arun Goyal, a former member at the Central Electricity Regulatory Commission (CERC).

Multiple challenges

Goyal explained many State Electricity Regulatory Commissions keep domestic and agriculture tariffs below the actual cost of supply. As a result, domestic and agriculture tariffs are required to be cross-subsidised by the commissions, and they are often constrained to fix commercial tariffs for sectors like telecom at commercial rates instead of the more favourable industrial tariffs, he said.

Telecom infrastructure providers also face challenges related to metering, unfair billing practices, and discrepancies in security deposits, COAI said in its letter to the power minister. Currently, telecom towers are required to have three separate meters—main, check, and standby—in certain states instead of a single smart meter, according to the industry body.

“We firmly believe that prioritizing smart meter deployment for telecom towers will not only resolve these issues but also enable more efficient operations for the distribution licensee,” COAI said in its letter.

Manoj Mishra, director of regulatory affairs at Indus Towers Ltd, said at an industry event in September that composite billing—a single bill for a region or company—and smart meters would help resolve billing disputes.

In the draft telecom policy released earlier this year, the department of telecommunications mentioned plans to implement a composite electricity billing system for telecom operators and internet service providers.

The Union power ministry, COAI, and the Central Electricity Regulatory Commission did not reply to queries emailed last week.