CESC profit down 27% on tariff order delay

Delay on the part of the West Bengal State Electricity Regulatory Commission in granting tariff order – against cost push – for the power utilities in the State had resulted a 27 per cent drop in net profit of CESC Ltd during the July-September 2011 quarter as against the corresponding period of the previous year.

Though there is no official confirmation, sources suggest that the tariff order was delayed to accommodate State-run power utilities – who have been consistently avoiding submission of tariff petition – in the order. Hamstrung by the political leadership, the cash-strapped state utilities have missed nearly seven extended deadlines to submit tariff petition till October.

“We expect the regulator to pass the order (for recovery of cost push during the year), without further delay,” a company official said. Since such an order would passed with retrospective effect from April 1, CESC may witness its profit for the subsequent quarters increasing at a faster rate than originally expected.

Sources in the state utilities, which are seeing a monthly revenue gap of Rs 250 crore, expect the regulator to come to their aid against the wishes of Ms Mamata Banerjee-led state government.

The state run distribution utility – West Bengal State Electricity Distribution Company – is especially hopeful of being awarded the tariff order for 2010-11, as was asked by the Appellate Tribunal for Electricity in April 2011. WBSEDCL is currently selling power at an average tariff of Rs 4.27 a unit, based on regulatory order for the year 2009-10.

“We understand that the regulator has already assessed the cost-push during 2010-11 and arrived at an average tariff of approximately Rs 5 a unit. Though this tariff would not include the cost push for the current fiscal, if awarded this would help reduce the revenue gap for the distribution utility,” a source said. The utilities are expecting to make profits at an average tariff of Rs 5.60 a unit.

Meanwhile, Mahanadi Coalfields – a subsidiary of Coal India Ltd – has reportedly started restricting coal supplies due to mounting payment outstanding by state generation utility. Though demand for electricity has reduced with the onset of the winter, the average peak shortfall in the districts is now ranging upto 300 MW.