Dark clouds gather after power tariff populism
SRIKUMAR BONDYOPADHYAY
Calcutta, Aug. 2: The three state government-owned power utilities have been given 15 days to file their tariff applications for the year after missing the August 1 deadline because of Mamata Banerjee’s insistence that there should be no rate hike.

One fallout of this delay is that the power tariff for the current financial year will only be announced at the end of the calendar year and arrears, if any, will have to be cleared in three to four months.

Another is that the state might face power cuts from October because West Bengal Power Development Corporation does not have money to buy coal. At present, it is generating enough hydel power but that is only for the period of the monsoon.

The state electricity regulatory commission (SERC), which has given time to the government firms till August 16, will need 120 days after it receives the petitions to decide the final tariff. So it will likely be December when the final tariff is announced.

A senior SERC official said the regulator might give the power companies — West Bengal Power Development Corporation, West Bengal State Electricity Distribution Company and West Bengal State Electricity Transmission Company — one or two more extensions.

“The regulator has the power under the Electricity Act, 2003, to announce its final tariff order suo motu, in which case the distribution company and the development corporation will have to abide by the SERC tariff order,” he said.

“However, we get the maximum data to determine the annual tariffs for electricity generation and distribution in the state from the power development corporation and the distribution company. Without their filings, the determination of tariffs by SERC would not be quite proper.”

Since April this year, the electricity regulator allowed power distribution companies to adjust any change in fuel cost in the previous month against the sale of electricity the next month.

Following this, CESC and the distribution company increased their power rates from May by 46 paise and 38 paise, respectively.

These changes are, however, provisional and a reconciliation of the actual increase or decrease in fuel cost will be determined in the annual tariff.

At present, the average power tariff of CESC stands at Rs 5.17 a unit and that of the distribution company at Rs 4.27 a unit.

If the final tariffs are fixed above what CESC and the distribution company are charging now, the arrears due from April will have to be cleared in the three-four months from the announcement. Last year, the tariff was announced in July.

CESC has submitted its petition to the SERC proposing a 34 paise hike in tariff.

Unable to file a tariff increase petition, the power producer corporation could not pass on its increased cost of production to the distributor. “Coal prices have increased steeply and Eastern Coalfields have almost stopped supplying us coal,” said an official of the power producer.

The power producer has a fuel supply agreement with ECL for 4.15 million tonnes, the official said. However, ECL has declined to supply any coal unless dues of around Rs 500 crore are cleared.

An official said: “This being the monsoon season, we are getting hydel power in sufficient quantity. But October onwards, when we’ll have to depend mainly on thermal power… we may not be able to supply enough power.”

This would affect CESC too. “On a daily basis, we buy 350-375MW from the distribution company,” a CESC official said.

If the state-run utilities are not allowed to raise tariff, the exchequer could lose Rs 1,500 crore this financial year, a distribution company official said.