The Telegraph
Since 1st March, 1999
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Subsidy shock drives govt to court

  • The Bengal government to move Calcutta High Court against the single power rate
  • The chief minister to write to the Prime Minister for legislative amendments
  • SUCI calls 24-hour Bangla band on January 27
  • Trinamul not to oppose bandh
  • The Left Front to organise protest rallies from Wednesday
  • The Congress drawing up protest plans
Calcutta, Dec. 17: The single power tariff rate sent shockwaves across the Bengal political landscape today, prompting a state government decision to move Calcutta High Court against the West Bengal Electricity Regulatory Commission’s decision to remove cross-subsidy.

Chief minister Buddhadeb Bhattacharjee will also write to Prime Minister Atal Bihari Vajpayee, requesting him to review the Electricity Regulatory Commission Act, 1998, and make necessary amendments to the provisions in the legislation dealing with power tariff subsidies to weaker sections.

“The WBERC has abolished the subsidy and has come up with an average tariff for all categories of consumers within CESC’s fold. This is not acceptable to us and we have decided to move the court as soon as possible. We are seeking the views of legal experts,” state power minister Mrinal Banerjee told the Assembly today.

The regulatory commission had announced yesterday that CESC will henceforth charge all categories of consumers at a flat rate of Rs 3.81 per unit for 2000-01 and Rs 3.90 per unit for 2001-02.

The consumers are expected to make the revised payments from February and arrears from April. But if the high court admits the government’s petition and grants a stay, the implementation will be delayed.

The Assembly witnessed uproarious scenes as parties cut across ideological lines and condemned the power tariff directive made public yesterday. Some Opposition legislators set fire to a copy of the commission’s report. The parties have also lined up a series of programmes (see chart) to protest against the order that would affect at least 18 lakh CESC consumers.

Banerjee alleged that the commission had removed the cross-subsidy — the policy of charging some consumers less and plugging the gap through charging others more — despite several requests by the state power department not to do so.

The commission has strictly gone by a Supreme Court ruling which underscored that state governments were free to provide power rate subsidies to any class of consumers, provided it was prepared to bear the cost of the burden.

The court had noted that it was unfair to expect the power utility or another class of consumers — like industrial units — to bear the cost.

The power minister announced in the Assembly that his government was not in a position to provide any subsidy to CESC. “The total subsidy that the state government has to provide to CESC for 2000-01 and 2001-02 works out to Rs 500 crore. It is not possible for any state government to provide such a huge subsidy,” Banerjee said.

“This will have an all-India impact. Other states will also follow in the footsteps of West Bengal,” he added.

Banerjee said that in the new draft tariff policy sent to the states, the Central government has suggested that cross-subsidy should be removed in a phased manner. “How can the WBERC remove subsidy at one go'” he asked.

Power industry experts feel that the government will ask the Centre to amend sub-Section 3 of chapter IV of the ERC Act which states that “no customer or class of consumers shall be charged less than 50 per cent of the average cost of supply of energy. Provided the state commission considers it necessary, it may allow consumers in the agricultural sector to be charged less than 50 per cent subject to the condition that the charges less than the said 50 per cent shall not be allowed after the expiry of a period of three years from the commencement of this Ordinance.”

The clause adds: “If the state government requires the grant of any subsidy to any consumer or class of consumers in the tariff determined by the state commission under this section, the state government shall pay the amount to compensate the person affected by the grant of subsidy in the manner the state commission may direct, as a condition for the licensee or any other person concerned to implement the subsidy provided for by the state government.”

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