For the first time in years, the Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) has submitted a petition which proposes an annual increase of tariff by 6%. Reeling under the weight of mounting debts and long-pending payments to generators, this was a long anticipated step.
Key reasons
One of the reasons for TANGEDCO’s poor financial health is that tariffs have not been revised on an annual basis, thereby resulting in a gap between average revenue requirement and average cost of supply. Continuous under-recovery over the years and the cancellation and or delay of projects have adversely impacted TANGEDCO’s capability to upgrade and modernise its distribution network and hindered the transition towards a smart grid future. Hence, the proposal of an annual adjustment of tariffs by the rate of inflation is a positive step — this will not only provide more predictability to its consumers but also avoid the one-time steep tariff increase every few years.
