Special Correspondent

Electricity Act against cross subsidy: KSEBOA

The KSEB proposal to reduce tariff for domestic consumers is against section 61(g) of the Electricity ActTariff reduction proposed now is precursor of steep tariff hikes on a future date, says union

THIRUVANANTHAPURAM: The Officers' Association in the Kerala State Electricity Board (KSEB), while welcoming the reduction in power tariff proposed by the institution, has said that cross subsidy to domestic consumers and weaker sections could be retained only if the Electricity Act of 2003 is suitably amended.

The Act, which is based on neo-liberal economic philosophy, does not care for the social realities of the country. It stipulates the phasing out the system of cross subsidy, under which the weaker sections, farmers and domestic consumers were all along being supplied electricity at rates lower than the actual cost of supply, association general secretary B. Pradeep said in a statement here on Saturday.

The KSEB's proposal to the State Electricity Regulatory Commission (SERC) to reduce the tariff for domestic consumers, who are already enjoying the benefit of cross subsidy, is actually against section 61(g) of the Electricity Act, which mandates phased elimination of cross subsidy.

Mr. Pradeep said that it had already become evident that this law could not be implemented in its true spirit anywhere in the country. In States such as Rajastan, Haryana, Andhra Pradesh and Tamil Nadu, where moves were made to implement the law in letter and spirit, the Governments had to retract their steps following strong public reaction. Electricity has become a basic necessity for the people and they expect its supply at a cost affordable to even the poorest. Power tariff is not something that can be determined by market forces just on the basis of profit-loss computations. The Electricity Act of 2003 should be amended keeping this reality in mind, Mr. Pradeep said.

He said the proposal to reduce the power tariff had become possible only because of some very hard work put in by the KSEB and its employees.

With the proposed tariff reduction, the KSEB will finish this financial year with a revenue deficit of Rs.339 crores. The KSEB's expectation is that the revenue deficit next year will be of the order of Rs.422 crores.

Mr. Pradeep said the KSEB had asked the SERC to treat the additional loss expected from the tariff reduction as `regulatory asset,' which meant just postponing the recovery of the amount to a later date.

In other words, the tariff reduction proposed now is the precursor of steep tariff hikes on a future date. Such an eventuality can be avoided only if the Government bridges the gap created now through the provision of the required subsidy, he added.