In poll year, Punjab’s power utility takes U-turn on tariff revision; seeks 20-32% reduction

In December, Punjab State Power Corporation Limited (PSPCL) had approached the Punjab State Electricity Regulatory Commission (PSERC) for a 9% hike. Now, under government pressure, it has asked the regulator to decrease tarif.

Sensing that power tariff will be a major poll issue in next year’s state assembly polls, the Punjab government has asked the Punjab State Power Corporation Limited (PSPCL) to seek reduction in rates for domestic consumers, and that too, a whopping 32% or one-third of the present charges.

The PSPCL is likely to recover this amount by imposing hike on industrial and non-domestic consumers. (HT file)

This is a U-turn from PSPCL’s December stance, when it had approached the Punjab State Electricity Regulatory Commission (PSERC) for a 9% hike. Now, under government pressure, it has asked the regulator to decrease tariff.

In the latest state cabinet meeting, ministers had objected to the ‘high tariff’ on electricity, an issue that the Aam Aadmi Party (AAP) has already raised in Punjab, claiming that their Delhi model was superior.

In its revised Annual Revenue Requirement (ARR) petition, the PSPCL is claiming a deficit of ₹3,003 crore on current tariff for the next fiscal, but has not asked for tariff hike. The overall cumulative revenue gap at the end of 2021-22 is projected at ₹9,807 crore.

In the revised petition, for domestic consumers up to 2 KW load, PSPCL has sought reduction of tariff for first 100 units from ₹4.49 to ₹3.2, a reduction of 32% from previous proposed tariff. There is reduction for domestic consumers ranging between 20% and 32%. The PSPCL, adopting the AAP government style, will recover this amount by imposing hike on industrial and non-domestic consumers.

“The retail tariff approved in tariff order for 2020-21 doesn’t meet total revenue requirement for 2021-22, including past revenue gaps. The recovery of total revenue gaps in a single year would increase existing tariff substantially, this would lead to tariff shock for consumers. PSPCL doesn’t intend to give tariff shock to its consumers and we propose to recover ₹9,807 crore over the next 2-5 years,” reads the revised PSPCL proposal that HT has accessed.

All-India Power Engineers Association Spokesman VK Gupta claimed that the PSPCL management was working under pressure. “On one side it is admitting that there is revenue requirement over last year’s tariff, but now it has asked for no revision. In power subsidy, it is short of almost ₹7,000 crore and is still not asking for recovery from power bills.”

HT made repeated attempts to contact PSPCL chairman and managing director A Venu Prasad, but could not connect with him.