Decoding the proposed power tariff hike for domestic consumer Premium

Those consuming more than 500 units may have to experience higher impact of the hike

The higher the level of electricity consumption, the greater is the quantum of hike.

This is the broad approach of the Tamil Nadu Generation and Distribution Corporation (Tangedco) towards power tariff, as spelt out in its tariff petition filed before the Tamil Nadu Electricity Regulatory Commission (TNERC).

Those who use more than 500 units, who account for only 3% of 2.37 crore domestic consumers in total, may have to experience progressively higher impact of the hike. This section of consumers will enjoy free electricity for 100 units bi-monthly. For the next 300 units, they will have to pay ₹4.5 per unit and for 100 units more, ₹6 per unit. The present arrangement is ₹2 per unit from 101 to 200 units, and ₹3 per unit for 300 more units. The consumption up to 100 units is free.

Once the threshold of 500 units is exceeded, the proposed rates would be ₹8 per unit (for consumption up to 600 units); ₹9 per unit (from 601 to 800 units); ₹10 per unit (801 to 1,000 units) and ₹11 per unit (above 1,000 units).

Eliminating aberration

As the power utility has sought to eliminate, through its proposed tariff petition, an aberration in the existing tariff for consumption above 500 units, the quantum of hike will vary from about 10% to around 20% for those who use up to 750 units.

However, it will go up to around 36% for those who use up to 950 units.

The significance of this section of consumers — those who use more than 500 units — can be gauged from the fact that it contributes nearly two-thirds of annual revenue from the domestic category. During 2021-22, of the revenue of around ₹11,190 crore from the domestic consumers, this section of the consumers was said to have contributed ₹7,460 crore.

The proposed tariff structure has been prepared, keeping in mind the requirements of the Tariff Policy of the Central government.

Barring agriculture and hut categories of consumers, no other section will enjoy the subsidy, which will go below 50% of the average cost of supply, an official explains.

As a result of the revised figure of subsidy, the overall subsidy is expected to rise by ₹3,500 crore annually. Now, it is about ₹9,300 crore.