Centre reminds discoms to issue tariff orders; all eyes on DMK to revise prices

The first test for the DMK government, which is to take charge on Friday, is whether it will revise the power tariff and also implement its promise to make one month power bill cycle against the present two months bill cycle

power system
To give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1, 2019.

The Union power ministry has sent a reminder to several state electricity regulators like Tamil Nadu Electricity Regulatory Commission (TNERC) to issue tariff orders for the financial year 2021-2022.

Irregular tariff revisions have limited the ability of discoms to become financially viable, which in turn, has led to delayed payment to power generators. Thus, the first test for the DMK government, which is to take charge on Friday, is whether it will revise the power tariff and also implement its promise to make one month power bill cycle against the present two months bill cycle.

“Some of the state electricity regulatory commissions are issuing tariff orders regularly in every financial year whereas some of the other SERCs are not strictly adhering to the provisions of the Act for timely issuing of the tariff orders,” the power ministry letter sent a few days back said.

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The recipients of the letter include major power consuming states like Uttar Pradesh, Tamil Nadu, Chhattisgarh, Karnataka, Rajasthan, Madhya Pradesh, Punjab, Telangana and West Bengal.

Related news: How is the new electricity bill plans a ‘power cut’ of states

With the conclusion of the assembly elections in West Bengal and Tamil Nadu, analysts feel that power tariffs for discoms in the state will soon be revised.

In Tamil Nadu, power tariff was last revised in December 2014. Even during that revision, the then chief minister J Jayalalithaa announced that up to 500 units, the power tariff revision will not come into effect for consumers. Again in 2016, soon after taking charge for the second time, Jayalalithaa announced the first 100 units free for all consumers. Thus TANGEDCO’s revenue has not increased as it should have while the subsidy from the government has increased and it comes at a lag.

In no other state, has the power tariff been kept unrevised for the past seven years like Tamil Nadu even though TANGEDCO’s expenditure has increased several times due to the revision in the cost of coal, rail rakes, salaries and wages among other expenditure.

As the revenue for TANGEDCO is more or less the same, it is not able to pay the power generators on time. Pending receivables of 45 days or more — to power producers stood at ₹82,400 crore at the end of March. Major states which owed the highest to power generators are Maharashtra (₹18,652 crore), Tamil Nadu (₹16,054 crore), Rajasthan (₹10,353 crore), Uttar Pradesh (₹5,688 crore) and Andhra Pradesh (₹5,127 crore).

TANGEDCO has received ₹13,000 crore as loan from REC and PFC as part of the Atmanirbhar Bharat financial support from the Centre. The Tamil Nadu government has also asked the Centre to release the balance of ₹32,000 crore promised by the Centre. This will go a long way in lowering the debt to power generators.

 

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