The Telegraph
Since 1st March, 1999
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Win for power subsidy

Calcutta, Aug. 1: Calcutta High Court today rejected the uniform power tariff structure for domestic and industrial consumers fixed by the State Electricity Regulatory Commission and asked it to redraw the rates in areas served by CESC Ltd.

While fixing the new tariffs, the regulator would have the liberty to recommend higher rates for industrial consumers “as they had the opportunity to pass on the burden of tariff hike to their customers by increasing price of their product”, the court said.

“Domestic consumers should get relief as they could not pass on their burden,” it added.

The verdict is a blow to the principle of uniform tariff proposed by the regulator and upholds the practice of cross-subsidy that the Bengal government wants to continue with.

Under cross-subsidy, industrial users pay high so that domestic consumers can pay low.

After today’s order, the regulator can be expected to fix tariffs in a way that provides relief to domestic consumers at the cost of the other category of users. The order clearly said CESC would not have to refund to domestic consumers the excess they may have already paid if the revised tariff is lower than the existing rate.

A division bench of the high court also held that till the time the regulator fixes the structure, CESC can charge the existing average cost of Rs 3.90 per unit for 2002-2003.

The government moved the court in March against the regulator which prescribed abolition of cross-subsidy by charging all CESC consumers a uniform rate.

Power officials said today’s order was exactly what the government was looking for, though the minister, Mrinal Banerjee, refused comment until he had gone through the details.

CESC said it would not be affected by the judgment immediately. “Let the tariff structure be differential or uniform, it will not have any financial impact on us as long as the average tariff remains the same,” said Sumantra Banerjee, the managing director.

Referring to cross-subsidy, the court said the government had the liberty to decide whether it should continue. The regulator had argued earlier that if subsidy were to continue, the government should pay it directly to the power utility instead of putting the burden on one section of consumers.

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