The Telegraph
Since 1st March, 1999
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Subsidy ghostconfronts govt
- Regulator prescribes single power rate

Dec. 16: In the eyes of the independent commission that fixes power tariff in Bengal, all consumers are equal.

It issued an order today fixing one rate, forcing the state’s communist government to decide if it is prepared to live with this equality.

Buddhadeb Bhattacharjee’s government would now have to choose if it would accept the order that comes laden with political trouble or would take upon itself the burden of subsidy, which power utilities — CESC Ltd in Calcutta and the West Bengal State Electricity Board in the rest of the state — now bear through cross-subsidisation.

Cross-subsidy means one section of consumers pays more for another section to pay less. Traditionally, farmers and domestic consumers have paid less than the cost of electricity and commercial customers more.

“I have not heard of such a tariff rate in India that provides for a single price for all consumers,” said a Central Electricity Regulatory Commission member.

Earlier, power minister Mrinal Banerjee had indicated the state would move court if the commission ended cross-subsidy.

Following the order of the West Bengal Electricity Regulatory Commission issued in connection with a court case involving CESC, all consumers will have to pay at the same rate of Rs 3.90 per unit consumed from February next year unless the government decides to subsidise any category/ies of consumers.

The total subsidy runs into several hundred crores of rupees, which the government — unable to pay additional dearness allowance to its employees — would find hard to swallow.

On the other side, an association of consumers has threatened to call a strike next month.

“The tariff can be challenged in court if the state government wants to intervene,” sources in the Union power ministry said.

CESC managing director Sumantra Banerjee was not hopeful that cross-subsidisation would end in a hurry. “Once anything goes to court, it takes a long time to settle the issue,” he said.

In March 2001, all state governments had agreed in principle to bear the cost of subsidy. Addressing that meeting of chief ministers, Prime Minister A.B. Vajpayee had said: “Subsidies in deserving cases should be provided explicitly through budgetary support. They cannot be sustained by irrational cross-subsidisation or at the expense of the viability of the state electricity board.”

An extent of the subsidisation is available in the tariffs now charged. The highest rate of tariff charged by CESC is Rs 6.61 and the lowest Rs 1.73. The rates in SEB areas are Rs 3.66 and 99 paise (agriculture). Although only CESC was involved in the court case, the principle followed by the commission here will apply to SEB too.

The commission’s order came after a Supreme Court directive asking it to fix the tariffs for 2000-01 and 2001-02.

In setting a single rate, the commission cited the court’s observation that under the Electricity Regulatory Commission Act, consumers should be charged only for the power consumed on the basis of average cost of supply without discrimination. The commission has fixed Rs 3.81 as the tariff for 2000-01 and Rs 3.90 for 2001-02. As the tariff for the current financial year has not been worked out yet, Rs 3.90 will be the rate. (See P 10)

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