Use more, pay less: Regulator for two-slab power tariff for industry in Punjab | punjab | Hindustan Times
Today in New Delhi, India
Oct 23, 2017-Monday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Use more, pay less: Regulator for two-slab power tariff for industry in Punjab

Punjab State Electricity Regulatory Commission recommends Rs 3.5 per unit rate from power-intensive industry; tariff for domestic, commercial consumers likely to be hiked

punjab Updated: Oct 02, 2017 09:09 IST
Gurpreet Singh Nibber
An induction furnace at Mandi Gobindgarh. This could one of the industries that might see lower power bill after the new tariff is introduced. Around 15% of the state’s industry is likely to benefit from the new plan.
An induction furnace at Mandi Gobindgarh. This could one of the industries that might see lower power bill after the new tariff is introduced. Around 15% of the state’s industry is likely to benefit from the new plan. (HT File Photo)

 

The Punjab State Electricity Regulatory Commission (PSERC), the sector regulator that also fixes tariffs for the vital resource, is expected to announce rates that broadly follow a two-slab rule, source have told HT. The principle of ‘higher the consumption of a consumer, the lower would be tariff,’ the source claimed, adding that initially the new formulae would come into effect only for industrial consumers. Other segments like domestic and commercial consumers will migrate to the new tariff gradually.

Notably, the tariff for the current fiscal that began on April is expected to be announced by October 15.

The details of the rates to be charged as per consumption are being worked out. The lowered rates, if implemented, will benefit the entire industry, but around 15% of the industry that falls in the high-consumption bracket will gain the most.

Top officers in Punjab State Power Corporation Limited (PSPCL), the power utility in the state, said that two-part tariff was best suited to the power surplus scenario, as it would lead to increase in consumption.

Domestic users to compensate for shortfall

To compensate for the shortfall arising from the industrial consumers, the tariff was likely to be increased for domestic and industrial consumers, despite the fact that domestic consumers in a public hearing by the PSERC demanded reduction in power tariff. The regulator can’t increase tariff for agriculture pumpsets beyond a limit because the section is subsidised and state government pays for it. 

Effective cost for sections of industry to go below Rs 5/unit

After the rates are announced, the cost of power for industrial consumers — particularly large consumers — such as arc furnaces will come down to between Rs 3.5 and Rs 4 a unit. In its poll manifesto, the Congress had announced power to industry at Rs 5 per unit. Some states like Gujarat and Maharashtra have implemented the two-slab tariff system.

The industry consumes nearly 15,000 million units annually (of total 45,000 million unit power consumption in state) and subsidising the sector as per this new formula will cost at least Rs 4,500 crore. If one adds the subsidy bill of Rs 6,000 crore for free power to 13.5 lakh agriculture pumpsets and SC consumers, the total subsidy bill would touch Rs 10,500 crore. 

Decision equivalent to Rs 4,500 cr annual subsidy

The industry consumes nearly 15,000 million units annually (of total 45,000 million unit power consumption in state) and subsidising the sector as per this new formula will cost at least Rs 4,500 crore. If one adds the subsidy bill of Rs 6,000 crore for free power to 13.5 lakh agriculture pumpsets and SC consumers, the total subsidy bill would touch Rs 10,500 crore.

State’s deal with Centre entails hike in tariff

During the SAD-BJP regime, the state had adopted the Centre’s Ujwal Discom Assurance Yojana (UDAY) scheme meant to revive the finances of electricity distribution companies. Under the scheme, the state took over loans of around Rs 45,0000 of PSPCL at reduced interest rates of 8.36% from 12.55%. In lieu, a tripartite agreement between the Union power ministry, the state government and the PSPCL stipulated the electricity tariff shall be raised by 5% in 2016-17 and by 9% during 2017-18. In 2016-17, tariff was reduced by 0.5%. Thus, to abide by the Uday scheme there has to be rise of 14.5% rise in tariff during the current financial year. 

Tariff announcement delayed

The announcement of tariff has been already delayed by a month. Under the norms, it should have been announced by March 31. 2017. For now, with the state government not communicating its mind on subsidy, the tariff announcement could take another two-three weeks.