Friday, May 13, 2022

Industrial, commercial power consumers pay cross subsidy between 28-178%: RK Singh

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  • As per the available data, the power tariffs (including government subsidy, if any) for domestic consumers range from Rs 1.40/kWh to Rs 12.65/kWh
  • The power tariffs for non-domestic category range from Rs 3.89/kWh to Rs 14.51/kWh

New Delhi: The cross-subsidy among states across various categories of industrial & commercial power consumers ranges between 28 percent on the lower side and 178 percent on the higher side, said Minister for Power RK Singh in the Rajya Sabha on Tuesday. In a written response to a question raised in the House, Singh said, “The cross subsidy among states varies across different categories of consumers. Cross subsidy for LT (Low Tension) Commercial category ranges between 28 percent to 172 percent, for LT industrial category it ranges between 28 percent to 163 percent, for HT (High Tension) Commercial Category it ranges between 100 percent to 178 percent and for HT Industrial Category it ranges between 34 percent to 160 percent.”

Cross-subsidy: Industrial consumers pay between Rs 3.35-10.0/kWh

As per the available data, the power tariffs (including government subsidy, if any) for domestic consumers range from Rs 1.40/kWh to Rs 12.65/kWh. The power tariffs for non-domestic category range from Rs 3.89/kWh to Rs 14.51/kWh. The agricultural tariffs range from Re 0/kWh to Rs 6.28/kWh. The industrial tariffs range from Rs 3.35/kWh to Rs 10.0/kWh, the minister told the Upper House of Parliament.

While asserting that the Electricity Act, 2003 provides that the tariff should be cost-reflective, Singh said, “As per National Tariff Policy, 2016, Appropriate Commission would notify a roadmap such that tariffs are brought within ±20 percent of the average cost of supply. Accordingly, the Central Government has been requesting the State Commissions to define a roadmap for cross-subsidy reduction and take steps to reduce such subsidy to ±20 percent of the Average Cost of Supply (ACoS) in compliance with the provisions of the Tariff Policy, 2016.”

Background

Industry leaders have often raised concern over high power tariffs for industrial and commercial consumers in India which increases the cost of production for products and services in the country. The cross subsidies are used by discoms to rationalise power tariffs for domestic consumers, for whom tariffs are rarely revised by regulatory commissions. State governments also subsidise power tariffs for domestic and agricultural consumers because it is a political issue that can make or break a political party’s chances of winning in an election. 

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