No substantial increase in power tariffs for the past five or six years may have helped consumers. However, distribution companies have incurred a whopping accumulated loss of about Rs 75,000 crore.
Going by the current trend, the distribution utilities are projected to suffer a loss of over Rs 1.16 lakh crore by 2014-15, according to estimates by the power ministry. The accumulated losses stood at Rs 74,977 crore in 2008-09, Rs 50,503 crore in 2007-08 and Rs 39,444 crore in 2004-05.
There are about 73 distribution companies in the country. However, unbundling of 40 utilities have been done, out of which only 11 are making profits, including North Delhi Power Ltd, Paschim Gujarat Vij Company Ltd, Western Electricity Supply Company of Orissa and West Bengal State Electricity Distribution Company Ltd.
The accumulated losses are on the rise, despite a downward trend in aggregate technical and commercial (AT&C) losses, because of a mismatch in the tariffs and cost.
The average cost of supply (ACS) stood at Rs 3.41/kwh in 2008-09 from Rs 2.93/kwh in 2007-8 and Rs 2.75/kwh in 2006-07. However, the average revenue realised on a subsidy basis stood at Rs 2.91/kwh in 2008-09 from Rs 2.65/kwh in 2007-08 and Rs 2.49/kwh in 2006-07, according to data from the ministry.
There have no tariff orders since 2006 by the electricity regulatory commissions of Tripura, Haryana and Nagaland. Since 2009, there has been no tariff revision in Assam, Chhattisgarh, Karnataka, Sikkim and Delhi. In Bihar, the last revision was done in 2008.
“In Rajasthan, state utilities have been borrowing from banks and state government is giving them guarantees and regulator is not allowing interest on that loan to be charged to their expenses,” CERC Chairman Pramod Deo told Business Standard.
“There has been no tariff hike in Rajasthan for the last 6-7 years, but utilities are not starved of funds. It is like a habitual borrower, every year, if you look at their (utilities) balance sheet, no bank should lend them…but the state government is giving them guarantee,” he added.
In such a scenario, the regulator finds it difficult to increase tariff and the state government had issued a directive to discoms not to ask for a tariff hike. But, for the first time, utilities have filed a petition for increasing tariff and an order will come soon. The tariffs in Rajasthan were last revised in 2005 and discoms of the state have accumulated loss of Rs 15,540 crore.
Deo said different state governments were following various methods. For instance, before the recent assembly elections in Tamil Nadu, there was a tariff order after a gap of 7-8 years.
In the tariff order for Tamil Nadu, the state regulatory commission has treated the huge gap between a recovery of about Rs 8000 crore, which should have been recovered in consumers tariffs, as regulatory assets, he added. The discoms there have an accumulated loss of Rs 16,774 crore in 2008-09.
