The Kerala State Electricity Board (KSEB) has sought the permission of the State Electricity Regulatory Commission to increase the power tariffs in 2013-14 to recover an additional sum of Rs. 1,573 crore from consumers . It was only six months ago that the commission had allowed the KSEB to increase the tariffs to net an additional revenue of Rs. 1,257.63 crore.

In its annual statement showing Aggregate Revenue Requirements and Expected Revenue from Earnings submitted before the commission on Thursday, the KSEB said the revenue gap in its operations would come to Rs. 2,758 crore during the next financial year, if the billing were to be done under the existing tariff structure.

The KSEB’s proposal is to be allowed to recover Rs. 1,573 crore, a part of the revenue gap, from the consumers. Of this amount, a sum of Rs. 752 crore is proposed to be realised from domestic power consumers. Recovering the full amount will lead to a tariff shock, the Board said. The unattended gap in the accounts is to be treated as a “regulatory asset,” which can be recovered from the consumers in the subsequent years, it added.

The year 2013-14 will in all likelihood witness the imposition of heavy surcharges and a revision in the formal tariff structure. The KSEB’s revised estimates for the current financial year say it will be finishing 2012-13 with a still bigger revenue gap of Rs. 3,564.4 crore, because of the two erratic monsoons and the compulsion to buy more quantity of high-cost electricity from stations running on expensive liquid fuel.

The recovery of such unexpected expenditure during the current year, as approved by the commission after scrutiny of the accounts and public hearings, will be in the form of a “fuel surcharge” that will be fixed by the beginning of the second quarter of the next financial year. Thus a double blow seems to be in store for the customers in 2013-14 — a stiff tariff hike and the imposition of an even stiffer “fuel surcharge.”

The annual statement said the average cost of supply of one unit of electricity was expected to reach the level of Rs. 5.92 for the KSEB during the coming financial year, whereas the average revenue realisation would be only Rs. 4.42. The revenue gap per unit would then come to Rs. 1.50. So the tariffs would have to be raised by 34 per cent for the KSEB to wipe out the entire revenue gap for 2013-14. The “fuel surcharge” to recover the unattended revenue gap for the current year would be in addition to this.

The regulatory commission will conduct public hearings in Thiruvananthapuram, Kochi and Kozhikode before taking a decision on the KSEB’s plea. The commission will announce the date of the public hearings later.

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