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

Calcutta, March 28: Buddhadeb Bhattacharjee’s government today announced its intention to build the concept of cross-subsidy in power tariff into the legal framework by amending the Electricity Regulatory Commission Act.

Power minister Mrinal Banerjee said the amendment Bill would be placed in the Assembly on Monday. “We have decided to do it (amend the provisions) to be able to continue with the cross-subsidy regime in the interest of lakhs of poor consumers,” Banerjee said.

Once the Bill is passed into law, the regulatory commission, whose responsibility it is to fix tariff, will have to recommend revision of rates bearing in mind the government-dictated need to subsidise one section of consumers at the cost of another.

The Bill is expected to receive unanimous support since all political parties opposed the regulator’s last tariff recommendation, abolishing cross-subsidy, and two Bangla bandhs have taken place in protest.

The regulator had, however, left the option open before the government to provide the subsidy itself instead of putting the burden on one section of consumers. But the government shied away from that decision because of its wretched finances.

Commercial and industrial consumers have been paying a higher rate so that the government can implement a political decision to subsidise domestic and agricultural consumers.

It is an arrangement that runs contrary to the government’s efforts to draw investment to the state because a high power tariff is a disincentive for industries.

“We are making the industrial sector pay more than the domestic consumer at a time when we are trying to send a message across that Bengal has a friendly environment for investors,” a power department official said.

Department sources admitted that it should be the state that should provide the subsidy.

The main objective of the Bill is “to protect the interest of low-tension, low-consuming domestic consumers and agricultural consumers so that they can be subsidised by high-end domestic consumers and industrial and commercial consumers”.

Officials who were closely associated with the regulator’s functioning said that by modifying the Act, the government is making cross-subsidy a part of the system that cannot be changed without another amendment.

The formal incorporation of cross-subsidy in the Act also “legalises discrimination” against one section of consumers.

“Any consumer who feels discriminated against can move the high court against the amendment,” an official said.

“In the laws applicable to the market, a bulk purchaser always gets a lower price. But, in this case, it will be different. However, there is also a social angle to it. Will poor people not get electricity at all'” he asked.

Officials said the Bill would not interfere with the authority of the regulator to revise tariff, except that on cross-subsidy its hands would be tied.

The government moved the high court and obtained a stay after the regulator directed an end to cross-subsidy.

“We want to amend the Act to avoid any future controversy over cross-subsidy. We did not try to amend the Act earlier because we did not anticipate a situation where the regulator might abolish cross-subsidy,” the power minister said.

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