TNEB seeks permission for raising tariffs

Hikes vital for plugging deficit in accounts.
Business Line Bureau

Chennai, March 9

The Tamil Nadu Electricity Board has petitioned the State Electricity Regulatory Commission, seeking increase in tariffs.

Pointing out that there has been no revision in tariff after 2003-04 and input costs (mainly, fuel and wages), the board has asked for permission to raise tariffs.

The proposed revision varies for different categories of high tension and low tension consumers.

If TNEB's petition for tariff revision is accepted by the Commission commercial establishments may have to pay Rs 300 a month per KVA (as existing) plus Rs 5.80 per unit of electricity consumed, against Rs 5 a unit now.

For low tension consumers, again the board requests differentiated tariff hikes. For example, it seeks to raise tariff for micro enterprises from Rs 3.10 a unit to Rs 3.75 if consumption exceeds 750 units in a month.

Domestic households will pay Rs 4 instead of Rs 3.50 for consumption of electricity between 101 and 200 units a month, Rs 4.25 (against Rs 3.50) for consumption between 201 and 300 units and Rs 5.75 (Rs 4.75) for consumption between 300 and 600 units.

Cinema theatres may need to pay Rs 5 a unit, against Rs 4.40 now. Private colleges may end up paying Rs 6 a unit, against Rs 4.40 now.

Deficit in accounts

TNEB has cited huge deficit in its accounts as the reason for the proposed hike in tariffs. Pointing out that the last tariff revision took place in 2003-04, the board has noted that cost of all inputs – fuel and wages in particular – has gone up.

It said if tariff is not revised, the board's expenditure will exceed income by Rs 9,417 crore for 2010-11, Rs 8,608 crore for 2011-12 and Rs 9,618 crore for 2012-13.

If the board is able to raise tariffs, the deficit will shrink to Rs 7,489 crore for 2010-11, Rs 6,495 crore for 2011-12 and Rs 7,410 crore for 2012-13.

The overall average cost of power at the consumer end for the year 2009-10 is estimated to be Rs 4.69 per unit. As against this, the overall rates of realisation from sale of power will be Rs 3.33 per unit.

“Therefore for each unit sold, the Board will be incurring a loss of Rs 1.36 during FY 2009-10,” the petition says.

The current tariff proposal is thus a step forward in the direction of correcting the tariff imbalances affecting the Board and making it at least partially financially viable.

Till such time the process of tariff reforms is wholly completed, the tariffs of various categories may not reflect the average cost of supply, it says.