State electricity boards (SEBs) will require an average tariff increase of Rs 10.44 per unit to break even, according to data compiled by the Planning Commission.
The Gujarat SEB will require the steepest tariff hike of Rs 38.75 per unit to return to profits.
As per the existing level of tariffs, most states would require an increase of around Rs 5 per unit for achieving a zero per cent rate of return (RoR), which was much below the 3 per cent RoR prescribed by the Central Electricity Authority (CEA) as a measure of viability of the boards, power ministry officials said.
The average is, however, distorted by some states like Gujarat, which require significant hikes in tariffs to tide over their present loss-making situation.
Other states that need steep increases in tariffs to break even include Madhya Pradesh and Rajasthan.
While MP requires an average tariff increase of Rs 15.51 per unit to break even, Rajasthan needs a Rs 14.14 per unit increase in tariff to achieve a zero per cent RoR, the commission says.
The reluctance among state power utilities to increase retail tariffs, and the sops provided to select consumer categories like farmers has been the primary reason for widening of the tariff gap.
Mounting losses, including billing and collection losses, had further deteriorated the situation.
This was evident from the fact that the average tariff increase required for SEBs to break even was Rs 5.20 per unit as per the tariff levels in 1992-92 but had steadly increased to Rs 10.44 per unit as per existing levels, a power ministry official said.
With state electricity regulatory commissions giving tariff orders in most states, the process of tariff rationalisation among classes of power consumers has begun.
However, since power tariffs remained a political hot potato and the tariff orders given by commissions depended on the annual tariff petitions filed by SEBs, the extent of rationalisation expected over the next few years was limited, officials said.
The 25 per cent average transmission and distribution losses of state electricity boards also did not help matters, officials said.
