The Hindu : Front Page : Panel examines ‘thermal surcharge’ plea

Online edition of India's National Newspaper
Sunday, Aug 03, 2008
ePaper | Mobile/PDA Version

Front Page

Front Page

Panel examines ‘thermal surcharge’ plea

P. Venugopal

Hearing throws up legal questions
Additional burden of Rs.2,548 crore: KSEB

THIRUVANANTHAPURAM: The State Electricity Regulatory Commission on Saturday started examining whether it can permit the thermal surcharge concept brought by the Kerala State Electricity Board (KSEB) to get over the difficulties caused by a poor monsoon.

The commission held the first of its public hearings on the KSEB’s plea here on Saturday. Another hearing is scheduled in Kochi on Monday.

The commission is likely to come out with its order immediately after the hearing in Kochi.

The KSEB’s argument is that the poor monsoon and a drastic cut in Central allocation of power would force it to go out of the budget this year to buy costly energy from naphtha and diesel power stations.

Giving a detailed workout of the data involved, its Finance Member Mathew George said the additional financial burden would come to Rs.2,548.48 crore, even with the supply restrictions already in force.

The KSEB wants to pass on Rs.1,078.20 crore of the total burden to the consumers as a temporary thermal surcharge and retain the remaining Rs.1,470.28 crore in the records as a ‘regulatory asset’ (to be bridged through borrowings, perhaps).

This ‘regulatory asset’ can then be recovered from the consumers in the subsequent years through tariff adjustments.

The surcharge will not be uniform for all consumers. Poor domestic consumers drawing up to 40 units of electricity a month, farmers, orphanages and similar institutions for the needy are to be exempted.

For other domestic consumers, it is 50 paise a unit for those drawing between 41 and 80 units a month and Re.1 a unit for those drawing between 81 and 300 units. All other consumers, including high-end domestic consumers drawing more than 300 units a month, are to pay the surcharge at a rate of Rs.2 a unit.

Mr. Mathew George said the KSEB would go bankrupt within months if the steps outlined in its petition were not admitted.

A delicate question, which remained in the background all through the hearing (with certain consumer groups bringing it up now and again), was whether the idea of levying different rates of surcharge on different categories of consumers was admissible under the Electricity Act, which mandated removing cross subsidy from the tariff system altogether and treating the rich customers on a par with the poor.

The Act also mandates that, if cross subsidy was indeed thought necessary, the government should subsidise the power utility and not ask the other consumers to bear the entire load.

Can Kerala government, with its heavily stressed financial condition, do that? This was another question raised at the hearing, chaired by the commission’s Chairman C. Balakrishnan.

Printer friendly page
Send this article to Friends by E-Mail

Front Page