TN power utility Tangedco seeks 6% annual hike in tariff

Tangedco has sought permission from the Tamil Nadu Electricity Regulatory Commission (TNERC) to revise the tariff at the rate of 6% every year and also wants to connect the tariff to inflation. If the TNERC provides permission, Tangedco consumers must prepare themselves to pay higher tariffs each year from next July onwards.

“In the tariff petition presented to the TNERC, Tangedco has said that the consumer price index (CPI) value of May will be taken as the basis from next year for calculating the tariff for all sections of consumers,” said a senior Tangedco official.

Next July, power consumers may experience an increase in tariff annually if the Tamil Nadu Electricity Regulatory Commission (TNERC) gives the nod for the Tamil Nadu Generation and Distribution Corporation (Tangedco)’s proposal.

A year-on-year increase in power tariff for all categories of consumers up to 2026-27 — has been mentioned in the tariff petition.

“We have capped the quantum of the hike at 6%. The utility has taken into account a five-year control period, which includes the present financial year. For the current year (2022-23), September 1 will be the date for the hike in tariff, subject to the regulator’s approval,” said the official.

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The quantum of 6% has been cited in the tripartite agreement signed by the state government, Tangedco, and the Union Government in January 2017 for the implementation of the Ujwal DISCOM Assurance Yojana (UDAY).

“Many states have been following a similar system for the tariff revision or adopting wholesale price index (WPI) as the basis for the calculation of the quantum of revision in the tariff,” said the official.

The petition talks about the gap between annual revenue requirement (ARR) and the projected revenue for the next four years, the figures of the gap for the years from 2023-24 to 2026-27 have not factored in the quantum of the hike, which will be decided by the TNERC annually.

“Though we want a yearly hike in tariff, we are not confident of getting the nod from TNERC as the state government is not in favour of this as in 20 months from now the state like other states will be facing the Lok Sabha elections,” said the official.

Even after the revision, if there will be a balance between ARR and the estimated revenue, the state government has given a commitment to absorb it fully, the official said. The current year’s balance (after taking into account the proposed hike for seven months of the year) will be around Rs 16,000 crore, he said.