The extent of average tariff hike, based on the orders issued in 16 states by State Electricity Regulatory Commission (SERC) is at a moderate five per cent, as against the proposed revision of 5-33 per cent in petitions filed by utilities, ICRA today said.
“This can be attributed to factors such as allowed fixed costs being lower than projected level, power purchases allowed in line with approved AT&C loss reduction trajectory and allowed true-up expenses for the past period being lower against the projected level in some cases,” it said.
Further, the limited tariff hike is accompanied by higher subsidy dependence as seen for utilities in states such as Bihar and Karnataka, it added.
“The overall subsidy dependence for 2016-17 for the state owned distribution utilities at all India level is estimated at Rs 757 billion, an increase of 7 per cent against the previous fiscal and the same is estimated to account for about 19 per cent of the revenue requirement approved for the utilities for this fiscal,” ICRA Ratings Senior VP Sabyasachi Majumdar said.
The increase in subsidy for the discoms can be mainly attributed to the states such as Bihar, Karnataka and Maharashtra, he added.
The rating agency further said that the distribution utilities in larger states, including Rajasthan and Tamil Nadu, are yet to file tariff petitions for this fiscal adding that delays in tariff filings can be attributed to proposed implementation of the UDAY scheme.
SERCs in 16 out of 29 states have issued tariff orders so far for 2016-17, which implies a modest progress in terms of issuance for the year, ICRA said in a statement.
“Distribution utilities in large states such as Rajasthan, Tamil Nadu and West Bengal are yet to file tariff petitions for this fiscal, let alone secure issuance of tariff orders,” it said.
It is also noteworthy that of these states, Rajasthan and Tamil Nadu have substantial revenue gap and accumulated debt levels, it added.
“Delay in tariff filings and issuance process may not be due to lack of willingness on part of the key stakeholders to address issues arising out of tariff-related issues. The delay can be attributed to the proposed implementation of the UDAY, which resulted in some uncertainty about quantifying the impact of the scheme on the cost structures of discoms and hence on tariff requirements,” Majumdar said.
In addition, the recently held assembly elections could also have led to delays in the tariff determination process for this fiscal in Assam, Kerala, Tamil Nadu and West Bengal, Majumdar said.