Apex power regulator asked to pull up SERCs over tariff

Written by Noor Mohammad | Noor Mohammad | New Delhi | Updated: May 2 2011, 07:05am hrs
As most of state electricity boards (SEBs) are headed for a financial crisis due to non-revision of tariffs by regulators, the Centre has rushed to intervene in the matter to avoid the possibility of having to pick up the tab later.

Power secretary P Uma Shankar said that his ministry has approached the Appellate Tribunal for Electricity (Aptel) seeking direction to State Electricity Regulatory Commissions (SERCs) to provide information on whether they have used their suo motto powers for tariff revision.

The ministry wants to know how many times SERCs have used their powers to determine tariffs of the power distribution companies (discoms) in their jurisdiction on a suo motto basis when the latter failed to approach them for price revision.

Under pressure from state governments, discoms avoid approaching SERCs for annual tariff revision despite increase in their operating costs.

But the Electricity Act 2003 empowers regulators to revise electricity tariff of discoms on a suo motto basis as well.

SERCs are required to consider tariff revision suo motto if discoms do not approach them. We have approached Aptel to seek information if SERCs are performing this function, Uma Shankar told FE.

On an average there is gap of R0.25-0.50 a unit in SEBs revenue. We want to see that the financial health of the discoms improves at the earliest. This can be done by ensuring that there is no gap in their expenditure and revenue, the power secretary said.

Under section 121 of the Electricity Act 2003, the Aptel has powers to issue direction to SERCs.

We have done what is permitted under the rule and hope for good results, said Uma Shankar.

The combined losses of SEBs are estimated to have reached R70,000 crore by 2010-11.A study conducted by the Forum of Regulators recently shows that SEBs' finances are in bad shape as SERCs do not allow discoms to pass the full cost of electricity to consumers. Power discoms in ten key states including Tamil Nadu and Rajsthan have been covered in the study.

It was found in the study that TNEBs accumulated losses have reached R16,774 crore as at the end of the financial year 2008-09. The SEB filed for tariff revision for the first time in 2010-11 after eight years. The story in other states is more or less same.

Meanwhile, the Shunglu committee set up by the Centre to update accounts of SEBs is expected to submit its report this month.