It is either further curbs now or a tariff shock later

The Kerala State Electricity Board (KSEB), in its latest submission before the State Electricity Regulatory Commission, gives sufficient hint about a tariff shock awaiting the power consumers by July, 2013.

The KSEB reported that it might have to incur a huge additional liability of Rs.2,626.20 crore during the current financial year on account of the reduction in hydroelectric power generation due the failure of the monsoon and the increase in energy demand.

Of this amount, an estimated sum of Rs.1,193.22 crore is the additional liability likely to be incurred for the period from December 2012 to March 2012. It means it will have to spend Rs.9.9 crore in excess of the originally budgeted amount on a daily basis till the end of the financial year.

Fuel surcharge

The regulatory commission was following a system under which such unexpected expenses, after due scrutiny of the accounts and public hearings during the first quarter of the next financial year, would be passed on to the consumers as ‘fuel surcharge.’

The surcharge would usually become effective from the month of July in the next financial year.

The KSEB noted that “the anticipated additional liability on generation and power purchase from December 2012 to March 2013 may result in an additional surcharge of Rs.2 per unit from all the power consumers during the period from July 2013 onwards for the energy consumed by them during the period from December 2012 to April 2013.”

For the time being, the regulatory commission has permitted the continuation of the twice-a-day 30-minute cyclical load-shedding in the 11-kV feeders. Giving particulars of the daily energy demand in the recent weeks, the KSEB reported to the commission that the load-shedding exercise had brought down the daily power consumption in the State by around 1.8 million units.

This reduction in overall demand would not suffice. The KSEB said it “could not survive with this huge liability, though the commission may allow [it] to recover the same as surcharge from the second quarter of the year 2013-14.”

Projecting the anticipated daily energy demand during the coming days after taking into consideration the reduction possible from the ongoing load-shedding schedule, the KSEB said the average daily demand was likely to vary between 55 million units and 62.2 million units during the period from December 2012 to May 2013.

Energy that goes into the KSEB’s grid included cheap hydroelectirc power, fairly cheap power from Central thermal power stations and very expensive power from thermal stations running on liquid fuel or purchased from energy exchanges and traders.

Grim situation

The situation was such that around 35 per cent of the total energy demand would have to be met by sourcing power from the liquid fuel stations.

The cost involved at present for this would come to more than Rs.11 a unit.

This expensive component in the total energy mix can be brought down only through further reduction in the total demand.

The financial disincentive scheme proposed by the KSEB to persuade the consumers to reduce the demand or make them pay at the rates representing the actual cost of power purchase from expensive sources would be subjected to close scrutiny and a public hearing by the commission before a decision is announced. The public hearing is scheduled for December 10.

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