Consumers' interests will be taken into account: TNERC chief

At the time of carrying out the next power tariff revision

Electricity consumers' interests will definitely be taken into account at the time of carrying out the next power tariff revision, according to S. Kabilan, Chairperson of the Tamil Nadu Electricity Regulatory Commission.

Replying to a query whether the tariff hike in future would be steep as the TNERC accepted the principle of regulatory assets, Mr. Kabilan told TheHindu on Wednesday that as and when the Tamil Nadu Electricity Board or its successor-entities came up with a tariff revision petition¸ the Commission would use its discretion and it would not force a “sharp hike.”

[The concept of regulatory assets pertains to accumulated financial losses that are allowed by a regulator to be recovered from consumers in future].

In its latest tariff order, the Commission had projected that after taking into account the new tariff and additional flow of about Rs. 1,650 crore in a full financial year, the revenue gap for 2010-2011, 2011-2012 and 2012-2013 would be Rs. 7,905.04 crore, Rs. 6,062.24 crore and Rs. 3,489.18 crore. The aggregate figure of accumulated losses would be around Rs.17,456 crore, which, going by the definition of the concept, had to be recovered from the consumers.

The order stated that “since a huge gap exists [for the current financial year] even after the proposed tariff hike, the Commission has no choice but to treat the remaining portion as regulatory assets.” The value of assets would increase in the next two years as the trend of revenue gap increased.

The Commission's move to address the issue of regulatory assets was in response to the TNEB's petition filed in January in which the Board had wanted the TNERC to regard as regulatory assets the Board's losses of around Rs.16,774.47 crore suffered during 2003-2004 to 2008-2009. The Board had also furnished the projected losses for the next three years ending 2012-2013. But, the Commission has disallowed the Board's plea for converting the accumulated losses of the past into regulatory assets but agreed to regard as regulatory assets the likely losses for the next three years.

Mr. Kabilan, however, insisted that the whole issue of regulatory assets would be examined only when the power utility approached the Commission for revision of the tariff after keeping in view audited accounts and fine-tuning of figures for the three years. The Board had filed the tariff petition after a gap of seven years. “One does not know when they will come to us again,” he said.

He added that the purchase of costly power from open market was a major reason for the widening revenue gap. If ongoing power generation projects were commissioned as per schedule, the gap would start coming down.

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