The hike in power tariff takes place in Delhi from next month while other states could follow shortly. Despite the looming hike in power tariff, there is no assurance that the supplies will improve.
"If the bill payment is delayed by even by one week, discoms (power distribution companies) charge more than 10% interest. So what kind of losses discoms have? There is no losses but it is for killing people," said Satish Kumar, director (electrical) at Delhi Metro Rail Corporation.
The coordinated move among state government could mean that power distribution companies across the country stand to benefit. The stocks of companies that own the power distribution firms in Delhi cheered the move, in a rather flat market today.
Reliance Power welcomed the move by the Delhi power regulator. Its group company Reliance Infrastructure owns distribution companies in Delhi and Mumbai, among others around the country.
Speaking to NDTV, Reliance Power CEO J P Chalasani. He said, "With whatever we look at, the retail tariff going up if different states and every state talking about increasing the tariff and improving efficiency, it's a good news."
Despite the public outrage, the Delhi power regulator (DERC) justified the tariff hike. P D Sudhakar, Chairman, Delhi Electricity Regulatory Commission said, "The hike was necessary to recover the past losses and only because there were no tariff hikes till 2010-11 the move to hike the tariff become necessary. It is expected that after this tariff hike, there will be no need for further hike in next few years."
India faced a 9.8 per cent shortage in power demand during the peak hours in 2010-11. State Electricity Boards, which supply power to residential and industrial users, have accumulated losses of over Rs 1.5 lakh crore (approximately $28 billion). During the current financial year ending March 2013, state electricity boards are expected to add Rs 58,000 crore (approximately $10 billion) to their accumulated losses.
Nearly 66 per cent of India's electricity is thermal power. With coal prices going up sharply across the world, power companies are bleeding since tariff has not been revised. Themal power plants worth 32,000 megawatts have been shelved because of high cost of coal.