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| India Infoline Sector Reports | Wed, 18-Feb-2004 16:50:28 IST (GMT+5:30) | |
| Power | ||
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Tariff Structure Power tariffs in India are characterised by zero to nominal agricultural tariffs, low domestic tariffs, reasonable to high industrial tariffs, high commercial tariffs and very high railway tariffs. There is a heavy element of cross subsidy in the tariff structure. The Tariffs For The Past 5 Years Have Been As Follows:
The Consumer Category-Wise Average Tariffs And 5-Year CAGRs Were As Follows In 1999-2000
Not only are commercial tariffs high, they have also borne the brunt of tariff hikes in the past. While agricultural tariffs were the lowest and there have not been any attempt to rectify it, going by the CAGR in the past 5 years. Tariff fixation has always been a politically sensitive issue. Consecutive state governments have failed to hike agricultural tariffs as they constitute the voting public. High industrial tariffs has led to increased dependence on captive sources of power which are cheaper (around Rs2.50 per unit) and more reliable. Industries such as cement, textiles and sugar have shifted to captive sources in a big way. The Electricity Regulatory Commission Act 1999 mandates the formation of State Electricity Regulatory Commissions by each state. The SERC will have the ultimate power in deciding tariffs within a state. This is an attempt to eliminate political whims in tariff fixation. Most of the states have already constituted the SERC. Recent tariff hikes recommended by OERC, TNERC, MERC and APERC have got a lot of attention. The Gist Of Each Of The Tariff Proposals Are As Follows OERC had approved an average tariff hike of only 4% as against X% demanded by Gridco. OERC has said that T&D losses (as high as 45% in Orissa) should be reduced drastically before any meaningful tariff hikes can be made. The Orissa cyclone had apparently compelled the OERC to take a soft stand on tariff hikes as people had already borne the brunt of cyclones. The OERC seems to have ignored the fact that the newly formed private distribution companies had also borne the brunt of cyclones which had damaged the distribution lines. TNERC recommended a tariff hike ranging from 14.2% for certain category of HT consumers to 4.4% for LT consumers. MERC recommended a lower increase in tariffs as against a 18-19% hike demanded by MSEB. While introducing a steep hike of 45% in domestic tariffs, MERC has reduced the base tariff for industrial consumers and recommended time-of-day metering for them, which will flatten the load curve. MERC has also advocated merit order basis for selection of plants for generation and mandatory metering of all agricultural connections. APERC recommended a higher 20% increase in tariffs as against 12-15% demanded by APTransco. Domestic consumers bore the brunt of the hikes and have been protesting against the proposal. Commercial consumers consuming more than 200 units a month have been asked to shell out a steep Rs7.45 per unit which is steep by any standards. A new element of ‘voltage surcharge’ of 10 per cent has been imposed on HT consumers
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