New Delhi: The amendment to the Electricity Rules proposed by the Central government is likely to lead to an increase in power tariffs. The Electricity Rules of 2005 framed with the intention of ensuring the healthy functioning of electricity companies are being amended. The Centre has sought the views of states on the draft rules in this regard.
It is the Electricity Regulatory Commissions that decides the quantum of revenue (Annual Revenue Requirement - ARR) that is required to ensure efficient service to the consumers and for the distribution companies to function profitably. However, most of the time, the actual revenue earned by the companies would be lower than the ARR.
The new condition in the amended draft rules is that the gap between the two figures should not be greater than 3% of the ARR. But the situation at present is such that the gap is 10% to 15% in many States, including Kerala. This goes up to even 20% in some States. If the deficit is to be reduced to 3%, the only way out is to raise the tariff.
Kerala’s deficit is Rs 2,939 cr
It is estimated that the gap between the revenue (ARR) that is to be earned by the KSEB in the current financial year as decided by the Kerala State Electricity Regulatory Commission and the actual revenue earned would be Rs 2,939 crore. This would form 15.31% of the ARR. If this is to be reduced to 3%, the income would have to be raised to Rs 19,770 crore from the present Rs 16,255 crore. This is likely to lead to a hike in tariffs.
