Numerous domestic consumers of electricity, who have only now realised the full impact of cent per cent tariff hike, may have to prepare themselves to face many more future shocks, if one were to go by the general tariff revision order of the Tamil Nadu Electricity Regulatory Commission (TNERC).
In respect of those consuming over 500 units bi-monthly, the Commission, accepting the proposal of the Tamil Nadu Generation and Distribution Corporation (TANGEDCO), has ensured the withdrawal of government subsidy, effective April 1. As a result, the quantum of hike for this section of domestic consumers is as high as 100 per cent. Till March 31, 2012, domestic consumers, irrespective of their consumption pattern, were provided government subsidy in tariff.
Of a total of 2.33 crore consumers in the State, the category of domestic consumers accounts for 1.6 crore, of whom 1.57 crores use electricity up to 500 units bi-monthly, according to the TANGEDCO’s information furnished to the press in April this year.
The TNERC, labelled by the Appellate Tribunal for Electricity as a “silent spectator” to the violation of its own regulations on tariff determination during 2003-2010, stated in its tariff order of March 2012 [page 308] that the present level of cross subsidy, given to low tension (LT) category consumers, had been brought down from 46 per cent to 20 per cent, “which is a huge shift towards the final goal of + 20 % of Average Cost of Supply.”
[This tariff order is in force up to March 31, 2013].
This means that eventually, the tariff for low tension consumers will be increased to 20 per cent higher than the average cost of supply (ACS), which changes from year to year.
Broadly speaking, the ACS is, in turn, influenced by a number of factors including the cost of generation and the cost of power purchase. So long as the share of generation by TANGEDCO’s power plants does not go up enormously, the ACS is likely to keep on rising.
The reduction in the level of cross subsidy can be explained by the increase in the ratio of average billing rate (ABR) to the ACS after the revision. [ABR is arrived at after dividing the amount realised from a given category of consumers by the number of units consumed by that category].
Under the previous tariff structure, only 54 per cent of the average cost of supply was recovered from the LT consumers but, as per the revised structure, it is 80 per cent.
The Tariff Policy notified by the Union Power Ministry in January 2006 states that tariff should be plus or minus 20 per cent of the ACS. It is another matter that the deadline fixed by the policy –2010-2011 – was missed months ago. And, there have been no public statements from the Union government with regard to the fresh deadline or advice to States to stick to this principle.
Still, the TNERC has chosen to make its intention clear that “the final goal” in tariff determination for LT consumers would be 20 per cent higher than the ACS, even though the Tariff Policy has given the flexibility of plus or minus 20 per cent.
When the Commission decides to hike the tariff in future, those consumers with over 500 units bi-monthly will be the most hit as lower-end consumers will be protected in one way or the other.
Even in the present order, the commission, which otherwise says that it has no power to subsidise any category of consumers, reduced the energy charge for those consuming up to 100 units bi-monthly from the proposed rate of Rs. 3 per unit to Rs. 2.6 per unit and in the case of those consuming up to 200 units bi monthly, to Rs. 2.8 per unit. But, the TNERC did not choose to extend this concession of reduction in energy charge to other categories of domestic consumers.
[However, in practice, the effective per-unit rates payable by the two categories of domestic consumers are Re. 1 and Rs. 1.50 as the government is providing subsidy of Rs. 1.6 and Rs. 1.3].
As energy experts say, the legal position is that State governments can provide subsidy to the extent they consider appropriate. In future, if the tariff of the domestic consumers with over 500 units bi-monthly is raised steeply as done in March 2012, it is up to the State government to come to their rescue.
