TNEB Tariff Plan Seeks To End Cross-subsidy

Chennai, October 17: | Updated: Oct 18 2002, 05:30am hrs
The proposed tariff revision plan, submitted by the Tamil Nadu Electricity Board (TNEB) with the Tamil Nadu Electricity Regulatory Commission (TNERC), has suggested measures to pare down cross-subsidy between domestic and commercial subscribers. It also sought to strengthen the `peak load pricing' by introducing differential tariff during the peak and non-peak hours.

D-Day For Suggestions Extended

The Tamil Nadu Electricity Regulatory Commission (TNERC) has extended the
deadline for submitting suggestions and complaints about the revised tariff plan prepared by the Tamil Nadu Electricity Board (TNEB) till October 30.

This follows requests from different organisations seeking more time for
submitting their reactions to the revised tariff plan. The earlier deadline set by the commission is October 23. The commission is expected to start hearing on the tariff plan in December first week.

According to TNEB's `Rationalisation of Tariff Structure' report submitted to TNERC, the SEB has sought to make a point of departure from the existing pricing policy. "So far the practice being followed in fixing the tariff rates for various categories of consumers is based on cost of the supply at consumer end, the capacity of the consumer to pay and the socio economic policy of the government. Hence the slab rates are so designed that the affluent customers are paying more and economically weaker consumers paying less for their consumption. Thus there is cross subsidisation between various categories of consumers and within a particular category of consumers itself," the document says.

But, as per section 29 (2) of the Electricity Regulatory Commission Act, 1988, the tariff should reflect progressively the supply cost of electricity. "Hence in future, the number of slabs will be minimised so that the rate will be around the cost of supply at the consumer end," it said.

However, the board sought to maintain slab system in the interest of low income consumers considering the socio-economic conditions.

Experts are of the view that the SEB's move to align tariff to cost is a right move towards eliminating the cross-subsidy currently prevailing. The practice of cross subsidisation has been distorting the electricity tariff fixation leading to high cost of power for the segments of consumers including industry, they pointed out. However, the extend of cross subsidy by TNEB is exactly not known.

The board has also proposed to further strengthen the `peak load' pricing system by offering concession for those high tension (HT) users operating in the off-peak hours. `Peak load pricing' is a method used in fixing user charges for utilities like power and telecom where in the consumers are dissuaded to use the utility during the peak demand period by charging a high price and encouraged to use the utility during the off-peak hours by charging lower price.

"The existing and new HT industries which work only in the night shift between 9.30 PM of the day and 5.30 AM of the next day are given a concession of 40 per cent of the appropriate rate for energy consumed during the night shift for a period of 7 months from July to January during a period of five years," the document says.

TNEB has already introduced `peak load pricing' through `Time of Day' metering system. The system bills the consumer according to the real time use of the electricity and charge on the basis of actual use in peak and off-peak periods.

To meet the peak demand, TNEB has to shell out additional resources to buy power from costly sources. To meet out this additional demand on resources, the board has proposed to slap an additional 20 per cent levy on the consumer on peak hours, the documnet says.