The philosophy of Kerala's legendary dacoit seems to have badly hurt Kerala State Electricity Board Limited. The consequence will be an immediate increase in power tariff, especially for poor domestic and commercial consumers.

It is now said that the 'Kayamkulam Kochunni model' of power management, of overcharging the rich to subsidise the poor, has become financially unsustainable. The Centre's tariff policy has also told state electricity boards in no uncertain terms to stop playing to the gallery.

The tariff policy recommends that rates should be fixed in such a way that the power bills of the subsidised categories, the poor, should be at least 80 per cent of the average cost of supply. As for the rich, especially the industrial and high-end domestic consumers, it should not be more than 20 per cent of the average cost of supply.

Socialism turned upside down

This will mean that the latest tariff hike proposals, which will be announced very soon, will impose a higher burden on the poor and the rich will be more or less left untouched. The poor will be taxed because their electricity bills are far below even 80 per cent of the average cost of supply. The rich cannot be taxed because some of them are already paying more than 20 per cent of the average cost of supply.

The average cost of supply, calculated on the basis of the power utility's annual average revenue requirements and its annual sales revenue, is now Rs 6.42 per unit. If the existing tariff fixed in August 2017 continues, then the collection from domestic consumers will only be 66 per cent of the average cost of supply. On the other hand, the tariff collected from a private tuition centre or a cinema studio or clinical lab or a scanning centre X-ray is already 50 to 60 per cent above the average cost of supply.

The KSEB now wants this gap bridged. Jacking up the tariffs of the more needy sections, and lessening the burden on profitable businesses, is the only way out. The Electricity Regulatory Commission, too, has found merit in the KSEB's proposal and has agreed to a tariff hike. The ERC, however, is not expected to give KSEB all that it had asked for.

The KSEB wants to mobilise an additional Rs 1102.70 crore from its consumers during the 2019-20 fiscal to bridge this rich-poor divide. This closing of the gap upends the socialist model, stands it on its head. The poor will be burdened and the rich will be given a slight respite. KSEB wants to amass nearly 67 per cent of this additional revenue, Rs 736.58 crore, from domestic consumers. Not from all of them, but from among the poorer lot.

Taxing poor, sparing rich

There are eleven tariff slabs under the domestic category. To be fair to the KSEB, it has proposed no change to the lowest slab where BPL consumers utilising less than 40 units a month are slotted. The existing tariff of Rs 1.50 per unit will stay.

But the KSEB wants a 7-20 per cent hike in tariff for the next three monthly consumption slabs (0-50, 51-100, and 101-150) within which falls the lower middle income groups and marginally better middle income groups or nearly 85 per cent of domestic consumers. Of course, the highest hike of 20 per cent has been proposed for the lowest consumption slab of 0-50 units, meaning the poorest among the APL consumers.

But for the highest two slabs, for those palatial multi- storeyed houses or sprawling farm houses that consume up to 500 units a month and those that gobble up even more, the KSEB has sought a lesser tariff. For instance, the existing tariff for those consuming over 500 units a month is Rs 7.5 per unit. The board has now proposed Rs 6.90. For those consuming up to Rs 500 units, the board wants the tariff marginally reduced from Rs 6.70 to Rs 6.65.

Less lucrative occupations or businesses, too, will be imposed a higher tariff. Agriculture consumers will be asked to pay more, not the offices of pawn brokers or banks. The local flour mill and saw mills will be asked to pay a higher power bill, not hotels and restaurants or marble and granite cutting units. Government schools and public libraries will be slapped a higher power bill, not private scanning centres or X-ray units.