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ERC move to push PCL further in the red

IN A move with serious financial implications for an already fund-starved Power Corporation, the UP Electricity Regulatory Commission (UPERC) today decided not to allow the corporation to fill its revenue gap by way of power tariff hike alone. Instead, the Commission will allow only 50 per cent of the deficit to be covered by tariff hike with the other 50 per cent being the licensee?s headache.

india Updated: Apr 12, 2006 01:14 IST

IN A move with serious financial implications for an already fund-starved Power Corporation, the UP Electricity Regulatory Commission (UPERC) today decided not to allow the corporation to fill its revenue gap by way of power tariff hike alone. Instead, the Commission will allow only 50 per cent of the deficit to be covered by tariff hike with the other 50 per cent being the licensee’s headache.
The Commission will formally communicate its decision to the UPPCL on Wednesday. This will only add to the financial problems of the UP Power Corporation Ltd (UPPCL) with a whopping revenue-expenditure gap of over Rs 3,000 crore.

The UPPCL had requested the Commission to allow it time till May 15, to file the Annual Revenue Requirement (ARR) for the year 2006-07. The ARR is a document, which projects the likely revenue receipts and the expenditures during the year.

The Regulator revises electricity rates on the basis on the revenue gap projected in the ARR. The UPPCL has sought extension in the deadline set for filling the ARR many times during last few months. “We may grant an extension this time also but with the rider that we will not allow the UPPCL to fill up all its revenue gap by tariff hike,” said UPERC chairman Vijoy Kumar. He added, “We will allow the tariff only to the extent that it compensates for 50 per cent of the gap. It will be for the licensee to fill the remaining gap by improving its efficiency and by way of Government subsidy.”

Kumar said that if the UPPCL files the ARR on May 15, it would take the Commission 120 days to give its verdict on the ARR. So, the new tariff could come into effect only in September, which meant there would be only six months left in the current financial year. “We cannot allow the UPPCL to pass on its burden on the consumers for the entire year,” he said. Apparently, the Commission is upset with the UPPCL for not filling the ARR despite repeated reminders and hence, this decision.

The Commission’s decision will also deprive half of the Government subsidy, which is based on the projected revenue gap.

First Published: Apr 12, 2006 01:14 IST