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Jolt to power consumers, Punjab hikes tariff by 8.64%
With Punjab State Electricity Regulatory Commission revising fixed and variable tariff upward for all categories, the government’s subsidy burden has risen to ₹21,162 crore
Two days after winning the Jalandhar Lok Sabha byelection, the Bhagwant Mann-led Aam Aadmi Party (AAP) government on Monday announced a power tariff hike by 8.64% in Punjab.
The Punjab State Electricity Regulatory Commission (PSERC) decision to hike electricity rates will hit the commercial and industrial consumers worst besides the Punjab government itself for its populist decisions of providing 300 units free to domestic consumers besides free power to farmers.
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The power tariff hike for domestic consumers with consumption of 100 units has been increased by 20% and for those consuming 300 units more by 15%. Since the state government gives free power up to 300 units for domestic consumers, it will foot the bill of enhanced tariff as subsidy.
Soon after the PSERC decision, chief minister Mann announced that the revised tariff would not impact the common man as the increase would be borne by the government for free power to domestic consumers and farmers.
Average cost of supply
With the PSERC revising fixed and variable tariff upward for all categories, the government’s subsidy burden has risen to ₹18,628 crore. However, the government has to shell around ₹21,162 crore, as it has to pay the power subsidy arrears of the past government of ₹2,535 crore, as the second instalment of ₹9,000 crore arrears.
While the free power to weaker section domestic consumers and farmers is ongoing since 1998, the Aam Aadmi government, fulfilling its poll promise sanctioned 300 units of free power every month to domestic consumers. This has more than doubled the power subsidy bill.
The PSERC has determined the additional revenue requirement of ₹3,584 crore, resulting in an increase of 56 paise/unit over the average cost of supply of financial year 2022-23. The net revenue to the Punjab State Power Corporation Limited (PSPCL) from the announced tariff during FY 2023-24 is ₹41,704 crore.
The average cost of supply of electricity is ₹7.04 per unit. Further, to meet the growing demands on the PSPCL, the commission has approved the capital investment plan of ₹6,047crore to upgrade distribution and transmission networks.
The PSERC has increased both fixed and variable charges for all categories of consumers. The commission has decided to make the new tariff applicable from May 16, 2023, up to March 31, 2024.
Agriculture tariff hiked, too
For domestic consumers, fixed charges have been increased by ₹15/KW and variable charges have been increased by 70 paise per unit for consumption up to 100 units, for the next 200 units, the increase will be 80 paise per unit and beyond 300 units, the increase will be 45 paise per unit.
For industrial consumers, fixed charges have been increased by ₹20 to ₹30 per KVA. For small power consumers, variable charges have been increased by 40 paise per unit, 30 paise per unit for medium supply and 45 paise per unit for large-scale industry.
The agriculture tariff has also been increased by 89 paise per unit.
The total subsidy payable by the Punjab government for the financial year is ₹18,627.88 crore. This comprises ₹8,809 crore for the agriculture sector, ₹5,883 crore for giving free 300 units to domestic consumers, ₹1,427 crore and ₹2,508 crore for industry, besides concessional tariff of ₹2.50 per unit to domestic consumers with load up to 7KW.
Shortage to high demand, reasons aplenty for hike
The PSERC attributed the tariff hike to factors, such as blending expensive imported coal with Indian coal at both state and central sector thermal power stations due to shortage in the supply chain, substantial increase in the rate of short-term power purchased through traders/exchange due to the rising demand, the unexpected surge in energy demand of the state during FY 2022-23 due to environmental reasons, and the increase in employee cost due to pay revisions besides normal inflationary increase.
