Electric utility TN Tangedco seeks 6% annual rate hike

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If TNERC approves, Tangedco consumers should prepare to pay higher, inflation-linked rates every year from next July

A year-on-year increase in the electricity tariff for all categories of consumers until 2026-27 – was mentioned in the tariff petition

Tangedco has applied for permission from the Tamil Nadu Electricity Regulatory Commission (TNERC) to revise the tariff at the rate of 6% every year and also wants to link the tariff to inflation. If TNERC approves, Tangedco consumers should be prepared to pay higher rates every year starting next July.

“In the tariff petition submitted to TNERC, Tangedco stated that the May Consumer Price Index (CPI) value will be taken as the basis from next year to calculate the tariff for all categories of consumers. “said a senior Tangedco official.

Next July, electricity consumers could see an annual increase in tariffs if the Tamil Nadu Electricity Regulatory Commission (TNERC) approves the proposal by the Tamil Nadu Generation and Distribution Corporation (Tangedco).

A year-on-year increase in the electricity tariff for all categories of consumers until 2026-27 was mentioned in the tariff petition.

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“We have capped the quantum of the increase at 6%. The utility considered a five-year monitoring period, which includes the current fiscal year. For the current year (2022-23), September 1 will be the date for the rate hike, subject to regulator approval,” the official said.

Also read: Why the Electricity Bill of 2022 is seen as a threat to the powers of state agencies

The 6% quantum was quoted in the tripartite agreement signed by the state government, Tangedco, and the Union government in January 2017 for the implementation of the Ujwal DISCOM Assurance Yojana (UDAY).

“Many states have followed a similar system for tariff revision or adopted the Wholesale Price Index (WPI) as the basis for calculating the tariff revision quantum,” the official said.

The petition talks about the gap between the annual revenue requirement (ARR) and the projected revenue for the next four years, the gap figures for the years 2023-24 to 2026-27 did not take into account the quantum of the increase, which will be decided by TNERC each year.

“Although we want an annual rate hike, we are not sure if we will get the green light from TNERC because the state government is not in favor of it because in 20 months the state, like the other states, will face Lok Sabha elections,” the official said.

Even after the review, if there will be a balance between the ARR and the estimated revenue, the state government is committed to fully absorbing it, the official said. The balance for the current year (after taking into account the proposed hike for seven months of the year) will be around Rs 16,000 crore, he said.

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