TN’s tariff hike plan may prompt others to follow

The state has not seen a major tariff revision in the past decade,except for a hike for cinema theatres and commercial establishments in 2010.

Written by Anil Sasi | New Delhi | Published: March 3, 2012 1:01 am

At a time when lenders have stopped extending working capital loans to power distribution utilities,Tamil Nadu joins a growing list of states that have decided to bite the bullet and hike electricity tariffs.

Tamil Nadu’s aggressive tariff petition,which seeks to nearly double domestic electricity tariffs in the state,could prompt other states to follow suit in order to stem the losses in the distribution sector. Bihar,Punjab and Delhi had announced tariff hikes during the course of the current fiscal,though the margin of hikes were much lower in comparison to what Tamil Nadu has now proposed.

Against the tariff revision petition filed by the state-run Tamil Nadu Generation and Distribution Corporation (TANGEDCO) in November seeking a record hike of as much as 75-100 per cent for domestic consumer tariffs,there are indications that the state regulator might shortly ratify an average 45 per cent hike across consumer categories. During the last 12 months,Punjab raised power tariff by 9 per cent on an average (across consumer categories),Bihar by 19 per cent,and Delhi by over 20 per cent.

In the tariff revision application filed with the Tamil Nadu Electricity Regulatory Commission,TANGEDCO has proposed drastic changes in the slab system for domestic consumers in order to prune the subsidy for consumers. Public hearings are currently on and the final determination of tariff will happen once this process is wrapped up over the next month. The TANGEDCO petition pitches for a 75 per cent hike in tariffs for people consuming up to 200 units,95 per cent for those consuming up to 500 units and nearly 115 per cent for those consuming above 500 units.

The state has not seen a major tariff revision in the past decade,except for a hike for cinema theatres and commercial establishments in 2010. A TANGEDCO official said that the hike was necessitated as it was costing about Rs 6 for the utility to generate a unit (kWh) of power,even as it realised only Rs 4 for every unit of electricity sold. While Tamil Nadu needs at least 11,500 MW,it has only 7,500 MW to distribute,resulting in massive power cuts of 6-8 hours across both rural and urban areas. Deep in debt,the utility cannot afford to bridge this gap by buying expensive power from the spot (or the short-term) market.

On the whole,the losses suffered by the country’s distribution utilities were estimated in the region of around Rs 70,000 crore in 2010-11 (unaudited numbers). Most distribution utilities,being state-owned and under specific instructions from the governments of the day,generally tend to avoid filing their tariff petitions in time,or in proper form,before the designated state power regulators.

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