Power corpn submits ARR, seeks up to 14% tariff hike

Aman Sood

Tribune News Service

Patiala, December 30

Despite “incomplete” information provided to the Punjab State Electricity Regulatory Commission (PSERC), the annual revenue requirement (ARR) has been accepted by the power regulator, but with certain riders. The PSPCL has sought a hike by around 12 to 14.10 per cent in the existing rates.

The PSERC, however, wants the PSPCL to submit the pending information at the earliest to enable timely processing of the petition and to issue a public notice containing details of the ARR for inviting objections from the public on the petition.

The PSERC had earlier wanted the power corporation to confirm that the route of competitive bidding was followed for short-term procurement and submit proof for the same. The PSPCL, however, failed to do so.

In case of generation business, the PSERC has asked the PSPCL to ensure segregation of details into thermal and hydel stations (plant-wise). Meanwhile, the PSPCL has submitted that the reply to this query will be submitted subsequently and there are chances that the tariff order may get delayed later than April 1.

Padamjit Singh, former chief engineer with the erstwhile PSEB, said, “The tariff exercise is carried out every year in an attempt to balance conflicting requirements. On one hand, there is the priority to bring financial viability in the power sector and on the other, the need to curb rising power tariff that impacts consumers adversely.”

“The Electricity Act, 2003, prescribes the principle safeguarding the consumer interests and at the same time, recovery of the cost of electricity in a reasonable manner. The critical parameter is revenue gap i.e. difference between income and expenditure,” he said.

Experts suggest that for 2020-21, the net revenue requirement is Rs 36,156 crore, while the revenue from existing tariff is Rs 32,705 crore, resulting in a gap of Rs 3,451.4 crore. The carry over gap of previous years will be Rs 7,728 crore, while the accumulated gap as on March 31, 2021, would be around Rs 11,179.66 crore.

From consumer viewpoint, increasing tariff is not the only way to bridge revenue gap. The other alternative is to improve efficiency and reduce losses. This would be the main challenge in tariff determination process.

Highly-placed sources said a proposal for withdrawing power subsidy to rich farmers was introduced during a special meeting convened recently by Chief Minister Capt Amarinder Singh to discuss the impact of the second electricity tariff hike in eight months.

The process

• After PSPCL’s proposal, public hearings are held where consumers get opportunity to file objections to the
• tariff proposals
• After public hearings, the PSERC holds a final hearing wherein the power corporation gives a presentation of its reply to the objections thus filed. The regulatory commission then issues
• the tariff order
• The tariff order should ideally be issued by March 31, but it usually gets delayed