First Green Consulting Pvt Ltd News Letter Electricity tariff to go up by 24% in Andhra Pradesh next fiscal

Electricity tariff to go up by 24% in Andhra Pradesh next fiscal

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Nearly 2.5 crore power consumers in the State are in for a rude shock as the AP Electricity Regulatory Commission (APERC) on Saturday permitted power utilities to hike tariffs by 23 per cent from April 1.As a result of the APERC’s latest order, a sum of Rs.6,500 crore will go into the coffers of the distribution companies during the 2013-14 fiscal. The overall burden on the consumers in the recent past, including the latest hike, will be a whopping amount of Rs.18,025 crore.

The Commission has already permitted the discoms to collect a huge amount of Rs.11,525 crore as Fuel Surcharge Adjustment (FSA) charges in the name of absorbing the price variations of fuels such as coal, gas, naphtha and RLNG.This is still not the end. The Commission has just completed a public hearing on the proposals submitted by discoms to collect a further amount of Rs.1,068 crore as FSA for the third quarter of 2012-13. If this is also permitted, the overall burden will rise to Rs.19,093 crore.

While the annual revenue requirement is projected to be Rs 52,753 crore, the projected total revenue from current tariffs is expected to be Rs 36,345 crore, leaving a revenue deficit of Rs 16,409 crore.The average cost of supply is expected to be Rs 6.32 per unit, reflecting an increase of Rs 1.07 per unit over last year. This works out to about 20 per cent. However, the average revenue realisation is Rs 4.36 per unit, leaving a revenue gap of Rs 1.97 per unit.

According to the annual revenue requirements (ARR) filed by the Discoms with the Andhra Pradesh Electricity Regulatory Commission, the hike will be particularly severe on high tension power consumers, which may go up by about 24 per cent. For domestic consumers it is likely to go up by 50 paise to Re 1 per unit depending upon the slab.

The State Government support with proposed tariffs, including agricultural subsidy is Rs 7,089 crore. The State has factored seven-hour supply to the agriculture category. The total energy available from long-term sources of 85,582 million units and restricted requirement is 99,046 mu, leaving a deficit of 13,464 mu. This is to be met from bilateral sources and use of R-LNG.

The discoms in their justification for increase in tariffs have mentioned there is seven per cent (37 paise per unit) increase in power purchase cost, 4.5 per cent hike in transportation cost, increase in gas price from $ 4.6 to $ 8.8 mmbtu, with exchange rate up by about 3 per cent. There is also increase in network cost. After all this, there is a revenue deficit of 27 paise per unit (5 per cent) for 2013-14, to be recovered along with tariffs for next financial year.

Source: TH & Business Line

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