Panel wants higher tariff for areas prone to power theft

In an attempt to accelerate reduction of transmission and distribution (T&D) losses in the power sector, a high-level government panel has recommended levy of a variable surcharge on power tariff with the impost to be higher in areas that report large-scale power theft.

The surcharge would vary from one sub-division to another within a distribution area, depending on the actual level of T&D losses.

Once implemented, the proposed system would ensure that consumers in high-theft areas pay a higher tariff than those living in areas where the incidence of theft is low. It is felt that this structure would also help in building public pressure to curb theft as often the activity also gets political patronage.

In its preliminary report, the Shunglu committee on the financial health of state power distribution bodies has recommended levy of a non-uniform loss surcharge by power regulators. Its quantum will vary from one area to other depending on the level of losses and the extent of theft. The idea behind the suggestion is that the issue of power theft cannot be just addressed by raising tariff in a distribution area but targeting the issue through strict monitoring mechanism and invoking a system that penalises such activities.

The panel, which made a presentation on the draft report to the Planning Commission on July 25, has also suggested a system of periodic evaluation of state regulators’ performance by independent experts to maintain a level of discipline in regulations and to ensure they are not colluding with state governments for providing a better projection of the health of distribution utilities.

The Shunglu committee is expected to submit its final report to the government by September. Its report will then form the basis of distribution sector reforms.

“The idea of a loss surcharge is great. But it will need a lot of consensus building by the government. The issue can also be discussed at the forum of regulators (a body of central and state level power regulators),” said an official of the Central Electricity Regulatory Commission (CERC).

Interestingly, Maharashtra adopted a similar tariff policy in 2005-06 but had to abandon it in the face of a strong consumer resistance. Since November 2008, the state is using loadshedding as a weapon to punish consumers in high power theft areas.