The story so far: On July 13, the Tamil Nadu Generation and Distribution Corporation (Tangedco) filed a general retail power tariff revision petition with the Tamil Nadu Electricity Regulatory Commission proposing to hike power tariffs by 10% to 35%. If the proposal comes into effect, expected in September, the hike will be after a gap of eight years. While announcing the government’s decision to increase the tariff, Electricity Minister V. Senthilbalaji maintained that the proposed power tariff hike will not affect one crore domestic consumers and people living in hutments out of a total of around 2.39 crore.
Why has the tariff revision petition been filed by the power utility?
A number of factors, which include mounting losses, outstanding loans and the consequent increase in interest burden, has compelled the Tangedco to file the petition. Even after joining the Ujwal DISCOM Assurance Yojana (UDAY) — a scheme meant for improving the health of state-owned electricity distribution companies (DISCOM)—in January 2017, Tamil Nadu could not bring down the gap between the Average Cost of Supply (ACS) and the Average Revenue Realised (ARR) to nil by 2018-19, as stipulated in the scheme. On the contrary, the gap rose to ₹1.07 per unit in 2019-20 against ₹0.6 per unit in 2015-16, according to a report of the Comptroller and Auditor-General on the implementation of the UDAY scheme by the Tangedco which was tabled on the floor of the State Assembly in May 2022. The Minister told the media that the cumulative financial losses went up from ₹18,954 crore in 2011-12 to ₹ 1,13,266 crore in 2020-21. What is more important than all these factors is the commitment provided by the Tamil Nadu government to fully absorb Tangedco’s losses, due to which the State government has made an allocation of ₹13,108 crore this year in the form of budgetary support.
