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Home News Power Sector News 37 percent power tariff hike in Tamil Nadu

37 percent power tariff hike in Tamil Nadu

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TNERCAfter nearly a decade of dodging tariff hike, the Tamil Nadu government has taken the bold step to increase cost of power to bail out the debt-ridden Tamil Nadu Electricity Board (TNEB) and ensure consumers shared a bit of its burden. While successive governments pursued a vote-bank policy to spare consumers, the 37% increase in power costs across various slabs, guaranteeing Rs 29,347 crore revenue, has set a precedence of sorts. With no administrative reforms in place and no funds to initiate fresh projects, the ailing board has been struggling to close the growing demand-supply gap. While the hike is bound to cause angst among consumers, from small to high-end domestic consumers and low to high tension industrial users, the decision was long-pending.

 Justifying the move, electricity minister Natham R Viswanathan told TOI, "Even after this hike, the board will continue to remain a loss-making unit". He added that the state energy regulatory commission was a statutory body and the state had no say in its decision. "I believe the decision has been taken after considering the losses incurred on transmission and distribution," he said.

While hiking the bus fares and price of milk in November last year, chief minister J Jayalalithaa indicated that a power tariff hike was also in the offing. Barely a few hours after the announcement hit TV channels, there were rumblings of discontent. "I am already paying more than Rs 3,000 for electricity bill especially during the summer months. This hike will be an additional burden", said a George Town resident S Amudhavali. As her house is located in a small, dingy lane, she is forced to use lights and fans for more than 15 hours every day. And, with the hike causing a ripple effect, residents will be under pressure to draw up tighter budgets and change their lifestyles.

The power tariff hike is bound to have an impact on costs of commodities and services. "There is an imperative need to generate more power as the tariff hike will have a spiraling effect on manufacturing costs of various products," said CPM MLA K Balakrishanan. The issue is expected to kick off a high-decibel debate in the ongoing assembly session. The hike has come as a rude shock for ailing industries. Textile mills say the state would become totally uncompetitive for new investments in the industry with the Rs 1.50 per unit hike in power tariff for high-tension (HT) consumers. No other state has increased the tariff to this extent at one shot and the proposed tariff will be the highest in the country for HT consumers, said S Dinakaran, chairman, Southern India Mills' Association (SIMA).

If anybody raised a toast to 37% tariff hike announced by the Tamil Nadu Electricity Regulatory Commission (TNERC) on Friday it had to be the state's power managers. The increase in revenue due to the hike in power charges is expected to bridge the income-expenditure gap of the Tamil Nadu Electricity Board (TNEB).

The board's current annual expenditure is around Rs 31,000 crore and its revenue is around Rs 23,000 crore. The hike is expected to bring in around Rs 8,000 crore, to bridge the deficit. "The hike will help us break even. But we will have to seek help from the government to pay our debts accumulated over the years," a senior TNEB official said. The board has accumulated losses of Rs 40,300. The board submitted to TNERC a projected deficit of Rs 14,000 crore for 2012-13. The commission, after due scrutiny, whittled the figure down to around Rs 8,000 crore. "Several power projects are coming up, including in North Chennai, Mettur and Kudankulam," a TNERC official said. "This will reduce power purchase at high cost and bring down expenditure."

The board will earn additional revenue of around Rs 5,300 crore from the low-tension category, out of which Rs 1,700 crore will be from domestic consumers. High-tension consumers will bring the power utility Rs 2,600 crore extra. Apart from approving the tariff hike, the commission has also asked the board to save money by reducing transmission and distribution losses. "We have been asked to monitor power use for agriculture and hutments that get free electricity. There are nearly 22 lakh agricultural and 15 lakh hutment connections that do not have meters. We need to know how much power they consume," the official said.

They have been asked to instal meters for these connections by September. "We have told the commission that this would involve additional expenditure and we will require more staff. We need at least 5,000 men to monitor the readings. New meters will cost Rs 1,000 crore and salaries and other benefits will mean additional expenditure of Rs 40 crore," another TNEB official said.

Tamil Nadu has much lower power charges than its neighbouring states as it has remained untouched for almost 10 years. The only recent spike in tariff came in 2010 for certain segments like cinema theatres and commercial establishments. Through this it earned an additional Rs 1,700 crore, the board was still left with a deficit of nearly Rs 8,000 crore due to recovery of dues, a government official said.

Source- Times of India


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