Your power bill could go up three-fold in the next 3 years

If you have been sweating over the recent increase in electricity
tariffs, there is more bad news. By 2012, your electricity bill is
likely to go up almost three times, thanks to the national tariff
policy (NTP) formulated by the Centre. Also in the news

The NTP, introduced in 2007-08 and valid for five years, says cross-
subsidisation has to be done away with. Therefore, over the next three
years all state electricity regulatory commissions will have to reduce
the subsidy given to residential consumers rather than charge
commercial consumers a lot more. This means every consumer will have
to pay for the expensive power purchased.


Currently, if the average cost of power purchased by a utility is Rs 5
a unit, it supplies the same to residential consumers at Rs 0.75 to Re
1 per unit whereas high-end commercial and industrial consumers pay Rs
5 to Rs 6 per unit.



But under the NTP, tariffs must progressively reflect the cost of
supply and hence the regulatory commission will have to bring the
rates to ±20% of the average cost of supply. For instance, if the
average cost of power is Rs 5 per unit, by the end of financial year
2010-11, the tariff for residential consumers (other than those below
the poverty line) should not be less than Rs 4 per unit. The tariff
for bulk consumers cannot be more than Rs 6.

"By 2012 every consumer will have to be brought on a par where the
average cost of power purchased will have to be recovered from them.
The recent tariff increase is a gradual move towards reducing the
cross-subsidisation," said S A Puranik, additional general manager
(electricity), of the Brihanmumbai Electric Supply and Transport
(BEST) undertaking.

The NTP is in compliance with the Electricity Act, 2003, which talks
of eliminating energy and peaking shortages by adding new generation
capacity of more than 1,00,000 MW during the 10th and 11th plan
periods, thereby guaranteeing electricity to every household in the
next five years.


The policy, however, respects the right of state governments to give
subsidy to poorer consumers.


State government officials, however, claim tariffs may not go up by
three times because additional generating capacities will be in place
by then and power costs will come down due to competitive bidding.