Kerala says ‘no’ to cross-subsidy

The State government has turned down a Central government proposal to restrict cross-subsidy in the power distribution sector at 20% as it will impose a heavy financial burden on farmers, marginalised sections and domestic consumers.

The Union Power Ministry had sought the State government’s comments on the draft amendments mooted to the tariff policy, which claims to foster competition in power generation and supply.

The draft clearly specifies that cross-subsidy surcharge and additional surcharge levied from major consumers who are permitted to open access, nod to draw power from generators of their choice, should not be onerous that it eliminates competition.

Social engineering

This also means that the Kerala State Electricity Board (KSEB) will be forced to go for an upward tariff revision for farmers and domestic consumers and lower the rate for commercial, industrial and even affluent people who use more than 500 units per month.

Board sources told The Hindu that the State was using cross-subsidy as part of a social engineering to give aid to the domestic consumers who were placed in different brackets and the marginalised sections who consumed up to 40 units.

Promoting competition

The draft amendments that are intended to promote competition, is heavily weighed in favour of the commercial and industrial majors and go against the interest of the farmers and domestic consumers, sources said.

At present power is provided for those consuming up to 40 units at Rs. 1.50 per unit. On limiting cross-subsidy, it will rise to about Rs. 4.50 per unit.

A large chunk of the domestic consumers, about 60 lakh, fall in the bracket who use between 100 and 150 units and they would be worst affected since their bills too would go up by Rs. 1.50 per unit as per the Central draft amendment.

The maximum rate that the board can levy from any category of consumer has been fixed at Rs. 6.72 per unit. At present the board is levying Rs. 7.50 per from those who burn up to 500 units and and Rs. 9 from commercial units.

The proposed amendments will force the board to scale down tariff of industrial majors and commercial units to Rs. 6.72 per unit and substantially raise the bill of the domestic consumers who constitute the majority.

Draft amendments are heavily weighed in favour of commercial and industrial majors

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