• Power distribution reforms: All is not well for states’ tariff revision

    The centre’s power distribution reform scheme Ujjwal Discom Assuance Yojana (UDAY) may have spread fast across states but the progress of timely and proper tariff revision in the current financial year seems to have been moderate at best across states.

    For 2016-17, State Electricity Regulatory Commissions (SERCs) in 20 states (out of overall 29 states) have issued tariff orders so far, signifying moderate progress. “This is given that utilities are required to file the tariff petitions for 2016-17 by November 30, 2015 and tariff orders are required to be issued by the end of March 2016 as per the terms of the tariff regulations. The recent assembly elections in the states of Assam, Kerala, Tamil Nadu and West Bengal delayed the tariff determination process for current fiscal,” said Sabyasachi Majumdar, Senior Vice President at ratings agency ICRA.

    While SERCs in Bihar, Haryana and Odisha have not approved any tariff revision, the SERCs in the state of Gujarat and Punjab have approved a marginal tariff reduction of 1.3 per cent and 1 per cent respectively for certain categories of customers.

    The state regulator in Chhattisgarh has approved a steep tariff hike of 15.7 per cent for the year in order to provide for the past year true-up and effect of an earlier judgment by the Appellate Tribunal of Electricity (APTEL) on all the state power utilities. Also, SERCs in Andhra Pradesh and Arunachal Pradesh have approved a nominal tariff hike of less than 1 per cent for the year.

    In the case of other 12 states, the extent of tariff revision ranges between 3.0 per cent and 8.8 per cent. Similar to the trend in the last financial year, the average tariff hike remained modest at 4 per cent for current fiscal across the 20 states.

    The process of filing tariff petition by the state-owned distribution utilities in Punjab and UP and subsequent tariff determination has also witnessed delays. While the utilities were required to file tariff petitions for FY2017 by November 2015, discoms in UP filed their petitions in March 2016 as against the Punjab discom, which filed its petition as per schedule. Further, while the tariff orders should ideally have been released by end-March 2016 as per the tariff regulations, the actual issuance happened in July 2016 and August 2016 for utilities in Punjab and UP respectively.

    Interestingly, both the states are participating in the UDAY scheme, which required a tariff revision in the range of 5-6 per cent for 2016-17. However, the actual tariff revisions allowed by SERCs in both the states were lower — at 3.18 per cent for UP and -0.98 per cent for Punjab for the year. The respective SERCs cited avoidance of tariff shock to the consumers as the primary reason for the modest tariff hikes.

    “The UP discoms have signed an agreement with the centre and the state government for participation in the UDAY scheme, as part of which, the utilities are required to improve their operational parameters in line with the agreed requirements. The tariff hike of 3.18 per cent approved for FY2017 is lower than the 5.75 per cent assumed in the UDAY scheme. Further, given that the distribution loss level for the discoms continue to remain higher than the stipulated levels, the success of the UDAY scheme will remain contingent on the ability of the utilities to adhere to the targets stipulated,” Majumdar said.

    Earlier, SERCs in 26 of the 29 states had issued tariff orders for the last financial year signifying reasonable progress. However, delays were observed in the issue of tariff orders for 2015-16 in states such as Assam, Jharkhand, Jammu & Kashmir, Maharashtra, UP and West Bengal. Also, tariff orders were not issued for last fiscal in Kerala, Tamil Nadu and Tripura. Tomas Hyka Womens Jersey

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