Nearly half of all the state electricity regulatory commissions (SERCs) have failed to issue tariff orders for FY17 while state-run power distribution companies in big states such as Rajasthan, Tamil Nadu and West Bengal are yet to file tariff petition with the regulators for the current fiscal, ratings agency Icra said in a report.
Among the 16 discoms that have secured tariff orders from the regulators, the average hike has been a modest 5% as against proposed tariff revision of 5-33% in petitions filed by utilities.
As per a judgment by the appellate tribunal for electricity (APTEL) in 2011, the state utilities must file tariff petition for upcoming fiscal year petition by November. The respective state regulators must issue tariff orders before the close of fiscal. The judgment also recommended that regulators can take suo motu action in determining tariff revision if utilities fail to file the same within the stipulated time.
"The delay can be attributed to the proposed implementation of the UDAY, which resulted in some uncertainty about quantifying the impact of the scheme on the cost structures of discoms and hence on tariff requirements," Sabyasachi Majumdar, senior vice-president, Icra Ratings, said. He added that the recently held Assembly elections could also have led to delay in the tariff determination process for FY2017 in the states of Assam, Kerala, Tamil Nadu and West Bengal.
The ratings agency said the limited tariff hike has been accompanied by higher subsidy dependence for utilities in Bihar and Karnataka. The overall subsidy dependence for FY17 for the distribution utilities at all-India level is estimated at '75,700 crore, an increase of 7% against the previous fiscal. This is estimated to account for nearly 19% of the revenue requirement approved for the utilities for the current fiscal.
The increase in subsidy can be mainly attributed to the increase in subsidy for the discoms in Bihar, Karnataka and Maharashtra, Icra said. It added that subsidy dependence in other states such as Andhra Pradesh, Gujarat, Haryana, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu, Telangana and UP continues to remain significant owing to the highly subsidised or free power supply scheme to agriculture consumers and to some sections of domestic consumers in these states.