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Home News Power Sector News AP - Rs.175-crore subsidy to ease hike in power tariff

AP - Rs.175-crore subsidy to ease hike in power tariff

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APExtending some relief to lower middle class power consumers aggrieved over the recent tariff hike, Andra Pradesh government has announced an additional subsidy of Rs.175 crore to insulate them from any extra burden. About 44.5 lakh out of 2.43 crore consumers in the State will benefit from the decision, Chief Minister N. Kiran Kumar Reddy announced at a press conference on 09-04-2012.

According to this decision, those consuming 100 units a month and less will be charged at the rate of Rs.1.45 a unit for the first 50 units, regardless of their connected load, instead of Rs.2.60 a unit as fixed by the AP Electricity Regulatory Commission (APERC) in its tariff order for 2012-13. The government will subsidise the difference. For the next 50 units, the rate however will be Rs. 2.60 per unit.

The APERC had fixed the tariff of Rs.1.45 a unit only for those consumers with a monthly consumption of up to 50 units with connected load below 500 kwh. This tariff is now being extended to those consumers with higher consumption and higher load.

The tariff order issued by the AP Electricity Regulatory Commission (APERC) on March 30 had divided low-tension (LT) domestic consumers into two categories: those with a connected load of 500 watts or less and those with more.
As per the hike order, those in the less than 500 watts category would have to pay Rs 1.45 per unit for 0-50 units, and Rs 2.60 per unit for 51-100 units. In the category of more than 500 watts connected load, the price was Rs 2.60 for 0-100 units.
Responding to demands for a rollback, chief minister Kiran Kumar Reddy on Monday decided to apply a uniform tariff of Rs 1.45 per unit up to 50 units in both the categories.
The government will bear the tariff difference of Rs 1.15 per unit up to 50 units consumption in the category of 500 mw and more connected load ('2.6 minus Rs 1.45). "This will add up to Rs 175 crore and will benefit 44.5 lakh poor and middle class consumers," Kiran Kumar said at a news conference.
The chief minister justified the tariff hike on the grounds that there has been a steep increase in input costs since the last rate hike back in 2003. For instance, the average cost of domestic coal has gone up from Rs 1,224 per tonne in 2003-04 to Rs 2,486 per tonne now. Similarly, the price of gas was Rs 4,550 per 1,000 standard cubic metres then while it is Rs 8,326 now, an increase of 93 per cent. The power purchase cost in 2003 was Rs 1.81 per unit, it is Rs 3.05 per unit now, up 68.5 per cent. The cost to serve, which was Rs 3.18 per unit in 2003-04, has gone up to Rs 4.42 per unit now, an increase of 39 per cent.The chief minister said that of the 243.6 lakh power consumers in the state, 135 lakh -- or 55 per cent -- were unaffected by the tariff hike.
Of those who remained unaffected by the tariff hike, 99.5 lakh were domestic consumers, 5.5 lakh were commercial users and 30.5 lakh farmers.
Of the 99.5 lakh domestic consumers with a connected load of 500 watts or less, as many as 72.2 lakh were not affected by the hike since there was no change in their base rate of Rs 1.45 per unit for 0-50 units. In fact, 27.3 lakh consumers benefited by the order because tariff was brought down from Rs 2.80 per unit to Rs 2.60 per unit for 51-100 units consumption.
The chief minister said the power subsidy borne by the government had gone up to Rs 5,533 crore inclusive of the relief of Rs 175 crore announced Monday. Of this, Rs 3,631 crore went to the farm sector.
Kiran Kumar sought to establish the fact that the subsidy paid by the state government to power utilities was the highest in the country. The second highest was Tamil Nadu which is Rs 4.294 crroe followed by Karnataka (Rs 3,567 crore), Maharashtra (Rs 3,000 crore), Madhya Pradesh (Rs 1,445 crore) and Gujarat (Rs 1,100 crore).


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