As the Centre is working on a bailout package to loss making Discoms, it will impose a condition of regular tariff revision to extend benefit under the package, a senior official in the Ministry said.
"To begin with once in 15 months, the revision should take place once in nine months. With the Ministry also planning to rate the Discoms based on their financial performance, the regular tariff hike was imminent," said the official.
Though at present the Indian Electricity Act empowers distribution companies to approach the state electricity regulatory commission every year seeking revision of tariffs, it was not happening as many times the state governments did not allow Discoms to hike the tariffs for years.
According to the Power Ministry, accumulated loss of the distribution companies stood at around Rs 1 lakh crore and the financial health of Discoms in states like Tamil Nadu, Uttar Pradesh, Bihar and Rajasthan was very poor.
Power utilities in the country face aggregate transmission and commercial losses of around 30 per cent.
The Power Ministry recently circulated a Cabinet note for setting up a Rs 1 lakh crore National Electricity Fund (NEF) to reduce transmission and distribution losses of state-run utilities by providing subsidy to Discoms.
The NEF could also be used towards building new infrastructure capacity like electricity transmission lines, transformers, replacing overloaded lines etc.
At the insistence of the Central Electricity Regulatory Commission and the Union Power ministry which sent out a directive to state electricity boards and power distribution companies (Discoms) to reduce the mounting debts, several state governments have started jacking up the power prices steeply. For the past six months, over 25 states have revised tariff ranging from 10 per cent to 37 per cent.
It may be noted that the Power Ministry, in its 12th Five Year Plan (2012-2017) draft report, had suggested amendments to the Electricity Act to empower the state electricity regulatory commission to revise the power tariff suo motu without waiting for Discoms to submit their proposals.
Source- Deccan Herald