State power regulators told to fix tariffs before start of fiscal year

Decision by Appellate Tribunal on plea by Union Power Ministry

It's an end to free lunches for consumers of most State electricity utilities in the country.

In an order on Friday, the Appellate Tribunal for Electricity ordered the State Electricity Regulatory Commissions to determine electricity tariffs before the beginning of every fiscal year, if necessary on a suo motu basis.

In case of delay on the part of the State utilities, as is now prevalent in the country, the State regulator is directed to initiate suo motu proceedings for tariff declarations.

Unlike the existing scenario where utilities of at least 22 States did not file tariff petition for at least two years or more, the Tribunal has now asked the State-level regulators to initiate suo motu proceedings “in the event of delay in filing annual revenue requirement petition (ARR) one month beyond the scheduled date of submission.”

The State regulators are asked to initiate the process of tariff determination based on ARR well ahead so that tariffs for any financial year (April-March) are fixed latest by the end of the previous fiscal.

Plea acted upon

The decision was taken in the wake of an application from the Secretary, Union Power Ministry, citing a revenue gap of Rs 1.07 on an average on every kilowatt hour of electricity sold by the State utilities, resulting in annual revenue loss of Rs 52,000 crore as in 2008-09.

The Planning Commission has projected that the annual revenue loss would rise to Rs 116,089 crore in 2014-15.

According to the Power Ministry, Tamil Nadu, Madhya Pradesh, Uttaranchal, Gujarat, Jammu & Kashmir, and Uttar Pradesh had last sought revision in tariffs in 2010 and are the best of the pack. The rest of the States last revised tariffs in 2009 and some States such as Himachal Pradesh, Nagaland, Sikkim, Tripura, Mizoram and Manipur have not asked for any revision in the last five years.