Another change in tariff: Centre tightens hold on electricity with new amendment

Thiruvananthapuram: The union ministry of power has amended the Electricity Act to include provisions for cost-based tariff determination by electricity distribution agencies. Electricity rates may increase further as they will need to cover the costs of the agencies.

The Electricity Regulatory Authority determines how much revenue distribution agencies like KSEB need to earn in a given year. As per the new rule, there will be no difference between this and the income calculated through electricity tariff. That is, the revenue determined by the commission will be collected wholly through tariff. A relaxation will be offered only in case of natural calamities. 

Even in case of natural calamities, the gap should not exceed three percent, the amendment states. The agency should also be allowed to charge interest on the ‘difference’ through the electricity tariff. The Regulatory Authority is often moderate in terms of tariff hikes to avoid sudden crunch for the public but this amendment will not leave space for such moderation.

The remainder of the revenue so far approved must be collected through tariff hikes over the next seven years. In Kerala, KSEB has to collect Rs 7000 crore from tariff as determined by the commission. It should be collected in equal installments over seven years. 

This Rs 7000 crores, needs to be collected in addition to the income required to be collected by the board in the respective year. Thus, an increase in tariff seems to be unavoidable.

Electricity is included in the Concurrent list of the Constitution. The Central and State governments are empowered to legislate on the subjects included in this list. However, in recent times, the centre has been solely making extensive interventions in the power sector.