Consumer price index value of May will be taken as the basis
From next year, July will be the month when electricity consumers may experience the increase in power tariff annually, if the Tamil Nadu Electricity Regulatory Commission (TNERC) gives the nod for the Tamil Nadu Generation and Distribution Corporation (Tangedco)’s proposal.
Also read: Explained | Power tariff revisions and the state of DISCOMs
This feature — year-on-year increase in power tariff for all categories of consumers for the next four years (up to 2026-27) — has been mentioned in the tariff petition filed by the Tangedco before the TNERC.
“We have capped the quantum of hike at 6%,” says an official of the Corporation, adding that the utility has taken into account a five-year control period, which includes the present financial year.
For the current year (2022-23), September 1 will be the date for the hike in tariff, subject to the regulator’s approval.
The utility has proposed the consumer price index (CPI) as the basis with May being the reference month. The difference between the CPI value of the year in question and that of the previous year will be taken into account. If it is lower than the ceiling of 6%, it will constitute the quantum of hike. Otherwise, the pre-fixed figure of 6% will be regarded as the quantum of hike.
The quantum of 6% has been cited in the tripartite agreement signed by the State Government, Tangedco, and the Union Government in January 2017 for the implementation of the Ujwal DISCOM Assurance Yojana (UDAY), a scheme meant for the financial turnaround and revival of Power Distribution companies (DISCOMs).
The official explains many other States have been following a similar system for the tariff revision or adopting wholesale price index (WPI) as the basis for the calculation of the quantum of revision in the tariff.
If the arrangement proposed by the Tangedco is cleared, the utility will not file the tariff revision petitions from next year till the end of the control period — till 2026-27. It will be sufficient that by the end of November, the utility submits audited accounts to the regulator.
Though the petition talks of the gap between annual revenue requirement (ARR) and the projected revenue for the next four years, the figures of gap for the years from 2023-24 to 2026-27 have not factored in the quantum of hike, which will be decided by the TNERC annually.
Even after the revision, if there is a balance between ARR and the estimated revenue, the State Government has given commitment to absorb it fully, the official points out, adding that the current year’s balance (after taking into account the proposed hike for seven months of the year) will be around ₹16,000 crore.
