Financial Daily from THE HINDU group of publications
Wednesday, Oct 02, 2002
Industry & Economy
Agri-Biz & Commodities - Power
TNEB proposes hike in tariffs Wants to end free power to farm sector
CHENNAI, Oct. 1
THE tariff petition filed by the Tamil Nadu Electricity Board before the Tamil Nadu Electricity Regulatory Commission seeks an increase in tariffs for different categories of consumers.
It suggests an increase of about 12 per cent for high tension industrial consumers and about 19 per cent for high tension commercial consumers; an increase ranging from 29 per cent to 11 per cent for domestic consumers, depending upon the slab; a 13 per cent to 16 per cent increase for low tension industrial consumers; and 12.5 to eight per cent increase for tiny industries, depending on the slab.
Two proposals in the petition charging 50 paise per unit for farm connections and 50 paise per unit for huts, both of which enjoy free supply now are politically sensitive.
It must be recalled that Tamil Nadu has agreed in the past, during conference of chief ministers convened by the Centre on the power sector, to levy a minimum 50 paise per unit for farm connections and is one of the few States to still supply free power to agricultural pumpsets.
Anticipating the protests, the Tamil Nadu Chief Minister, Ms Jayalalithaa, has sought to allay apprehensions over the proposals. In a statement, she said that "at this preliminary stage, there is no need for apprehensions and misgivings to be aired from any quarters and it is hoped that a decision on revision of tariffs will be taken by the State Electricity Regulatory Commission in a judicious manner taking into account all the aspects related to this issue".
She pointed out that the commission would hold sittings to ascertain the views of all consumers and then analyse the performance of the electricity board before arriving at a conclusion on the tariff petition. Besides, she said, the regulatory commission would also take into consideration the Government's views on this matter, before finalising the recommendations on tariffs.
Despite the increase in tariffs sought for, the Tamil Nadu Electricity Board (TNEB) anticipates a deficit of Rs 633.06 crore at the end of 2003-04. The TNEB's petition seeks a tariff revision from December 1, 2002. (It may be recalled that the tariffs were last revised in November 2001.)
The revenue increase because of the proposed tariff will be 33 per cent up from the Rs 9,509 crore this year to Rs 12,654.83 crore in 2003-04. The number of consumers is expected to increase by five per cent.
The Tamil Nadu Electricity Regulatory Commission has publicised the aggregate revenue requirement and revision of tariff, as filed by the TNEB, and called for objections to the proposals. Based on the representations, the commission may call for public hearings before giving its decision.
The whole process is expected to take between three and six months. The TNEB had engaged CRISIL as consultant to file the tariff petition.
As per the tariff revision sought for, the TNEB has asked for an increase of 40 paise per unit for HT industrial consumers and a hike of 80 paise per unit for HT commercial consumers, without any change in the maximum demand charges.
The total revenue from the HT consumers is expected to go up to Rs 5,493.33 crore in 2003-04, at the tariff sought for, from Rs 4,623.46 crore expected this year.
With the tariff increase asked for, there will be a 17 per cent jump in revenue from HT industrial consumers while their consumption is expected to go up by 7.3 per cent.
Likewise, a 30 per cent increase in revenue is expected from the HT commercial sector with the increase asked while their consumption is anticipated to increase by 13 per cent.
As far as the low tension consumers are concerned, at the tariff revision sought for, there will be a 48 per cent increase in total revenue from domestic consumers revenue jumping to Rs 7,161.50 crore in 2003-04 from Rs 4,885.54 crore this year, a 15 per cent increase in consumption by this category from 26,779 million units this year to an expected demand of 30,007 million units in 2003-04, while the number of consumers is expected to go up by six per cent.
The TNEB has anticipated a nine per cent increase in agricultural consumption and has projected a revenue of Rs 530.45 crore from 17.39 lakh consumers from the agricultural sector, in 2003-04.
As far as domestic consumers are concerned, the TNEB has sought an increase of: 25 paise per unit (for the lowest slab of consumption up to 50 units for two months), 30 paise per unit for those consuming between 51 and 100 units for two months; 60 paise for consumption between 101 and 200 units; Re one for consumption between 201 and 600 units; 75 paise per unit for consumption between 601 and 1000 units; and 50 paise for those consuming over 1001 units for two months.
For agricultural pumpsets, the TNEB has sought to levy 50 paise per unit or Rs 600 per HP per annum. Likewise, for supplying power to huts, the electricity board has sought to charge 50 paise per unit or a flat rate of Rs 10 per month.
It was officially explained that the TNEB projected a deficit despite the increase sought for mainly because of the Rs 1000 crore it was losing on supplying subsidised power to domestic consumers.
A majority of the domestic consumers, almost 90 per cent, was in the lower slab and the supply to them was below the cost of production, officials said.
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