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Wednesday 7 March 2012

Power hike cleared for CESC homes

Power hike cleared for CESC homes

CESC homes will pay more for power from the next billing cycle, following a green signal for tariff hike.
The West Bengal State Electricity Regulatory Commission issued an order on Tuesday allowing the private power utility, which serves about 25 lakh customers, to increase its average tariff per unit from Rs 5.19 to Rs 5.88.
The hike would come into effect retrospectively, from April last year. The arrears for the past 12 months would be collected in 48 monthly instalments.
The increase in power bill would depend on the consumption level. A household consuming 500 units a month would have to pay more than Rs 300 extra (see chart).
The hike by the RP-Sanjiv Goenka Group company comes at a time when Mamata Banerjee is zealously protecting about one crore consumers served by the state-run power distribution utility from a tariff hike.
CESC had applied for an increase of about 21 per cent last July. The commission's order on Tuesday allowed only a 13 per cent hike.
"We are disappointed. We wanted the tariff to be Rs 6.30 per unit," said a company spokesperson.
A unit of power supplied by CESC — which has a monopoly in power distribution in the city and Howrah — will now cost 35 paise more than a unit supplied by the state-run distribution company.
"Power tariff has become a holy cow in Bengal because of the chief minister's opposition to a hike. CESC being a private company can raise tariff but since we need the government's approval to file tariff revision petitions, we cannot do so despite mounting losses," said a power department official.
Since assuming power last May, the chief minister has not allowed the state-owned distribution company to file tariff revision petitions with the regulatory commission. The state-owned company is expected to incur a cash loss of over Rs 1,250 crore this fiscal.
Power utilities, whether public or private, can raise tariff only after an approval from the commission.
The panel takes into account two types of costs. The tariff revision petitions linked to fixed-cost components, such as plant and machinery maintenance, interest payment, depreciation of fixed assets, salary and pension, are filed once a year.
Power utilities are allowed to increase tariff every month if variable costs, primarily expenditure on fuel, go up but they have to justify the hike at the end of the fiscal year.
"The government has not allowed the tariff to be linked with the fixed cost, but it has allowed adjustments in view of the steep hike in coal prices," explained a power department official.
As Mamata has not yet objected to a tariff hike because of increase in variable costs, the state-run power utility has been able to increase the amount it charges per unit from Rs 4.71 to Rs 5.53 in the current fiscal year. "To break even, we need to charge more than Rs 5.60 per unit," said the official.
The hike would enable CESC to rake in an additional Rs 550 crore annually, said a company official.
The commission's last tariff order for CESC in July 2010 allowed the utility to increase its tariff from Rs 4.57 to Rs 4.73. Last May, CESC hiked tariff by 46 paise citing increase in variable costs.
A power department official said the private player was in a much better position than the state-run utility because of its efficient cost structure and absence of competition.
"In some other states, there is competition among private players, which helps consumers," said the official, pointing out that multiple distribution utilities were allowed under the electricity reforms process adopted by the central government.

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