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A tariff shock to Tamil Nadu power users

Power transmission and distribution lines in Chennai.

Power transmission and distribution lines in Chennai. | Photo Credit: B. Velankanni Raj

The Tamil Nadu Electricity Regulatory Commission (TNERC) has administered a tariff shock to power users across the board by virtually endorsing a petition filed by the Tamil Nadu Generation and Distribution Corporation (Tangedco) for a general tariff revision. For domestic consumers, the quantum of hike ranges from 11% to 45%, with effect from September 10. Those who use 550 units in two months will have to spend ₹2,350, which is ₹240 more than what they did in the past. Those consuming 450 units bimonthly will have to pay ₹1,425, which is ₹445 over the same level of consumption earlier. A consumer using over 1,000 units has been slapped with a rate of ₹11 for every unit in excess of 1,000 units. A new category — common facilities in multistorey tenements — has been created without any convincing reason, wherein a flat rate of ₹8 per unit has been imposed. This category will cover facilities such as gyms, community halls, amphitheatres and swimming pools, even if these facilities are used only by residents of the complexes concerned, free of cost. There is no rationale given for the introduction of this category, which can also cover any additional connection at any individual house. Also, the probability of field-level corruption is high when stiff consumption charges are levied. Eventually, the purpose of having a higher tariff would not be served.

Even though the power utility, through an additional affidavit filed on August 30, reduced its original proposal for a hike in demand and energy charges for certain types of consumers, including industries, consumers have not been fully spared from the dosage of increase.

However, agricultural consumers continue to be protected. With the DMK government having made it clear that it wants to continue free power supply to farmers, the Commission does not want to be left out in demonstrating its soft corner for agriculturists. This time, there is no stipulation with regard to the metering of around 20 lakh farm connections enjoying free power supply.

While the TNERC has toed the line of power utility by providing an option to domestic consumers to voluntarily give up the free 100 units they are provided bimonthly, there is nothing in its tariff order to indicate that the panel has considered extending a similar option to other types of consumers who have free power supply. Among those consumers who are covered under the free power supply scheme are those with agricultural connections, including high-tension lift irrigation cooperative societies; huts; handlooms (up to 200 units); and power looms (up to 750 units).

Besides, the Commission has agreed to another key proposal of Tangedco: to implement an annual hike at least up to 2026-27, which will be linked to the consumer price index. Again, no strong reasons have been adduced for accepting this. There is no clarity on how rising labour cost, which has been covered under the head ‘operation and maintenance expenses’, is going to be brought down.

The justification for the increase runs like this: No hike was made in the last eight years, leading to the cumulative losses of Tangedco rising to ₹1,13,266 crore (March 31, 2021). There is pressure from Central agencies for the increase, with the Union Power Ministry making it mandatory for the States to introduce power sector reforms with tariff revisions for any additional borrowing.

If accumulation of losses is the main reason for the tariff hike move, one should not overlook the fact that the TNERC, which issued a suo motu tariff hike order in December 2014, did not repeat the exercise. It should have been closely following the financial health of Tangedco all these years. The TNERC should also bear a considerable amount of the blame for all that is wrong with Tangedco.

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Printable version | Sep 14, 2022 1:23:37 pm |