About one lakh industrial, commercial, private hospitals, educational institutions and domestic consumers consuming above 300 units of electricity are happy because the commission has finally accepted their long-standing demand for partially doing away with cross-subsidy.
These consumers have got around 15 per cent tariff reduction and CESC will have to pay back the extra money collected for the previous year. However, high tension industrial consumers will have to pay 30 per cent more energy charge during the peak period, that is between five in the evening to ten at night from July 1, 2004 if they draw power beyond their sanctioned contract demand. But off-peak rate will be less by 25 per cent in the case of time-of-the-day tariff applicable to them.
On the other hand, around 18 lakh domestic consumers, who consume upto 300 units a month, will have to cough out more money, both for this fiscal and for the previous year.
About one lakh CESCs industrial, commercial, private hospitals, educational institutions and domestic consumers consuming above 300 units of electricity have got around 15 per cent tariff reduction but around 18 lakh domestic consumers have to pay higher tariffs
While CESC is likely to adopt the tariff order at its next board meeting which is expected to be held shortly, the state chief minister Buddhadeb Bhattacharjee has reportedly expressed his unhappiness over the hike.
Once the CESC tariff is accepted, tariff for the West Bengal State Electricity board has also to be increased.
The chief minister has discussed the issue with power minister Mrinal Banerjee who is expected to submit his report in the first week of June.
However industry sources say that this is a step forward towards removal of cross-subsidy. We hope the commission will totally abolish it as early as possible,
The Supreme Court in its order on CESC tariff said that the cross-subsidy had to be abolished. If the state government wanted to provide subsidy, then it has to bear the burden. The West Bengal government has made it clear that it is not in a position to do so. However, it requested the WBERC to abolish the cross-subsidy in phases and not in one go.
Overall, the total tariff will be less by 3 per cent for 2004-05, which means CESC will face a 3 per cent revenue loss if the consumption remains static. CESC executives are not perturbed with this loss as they could reduce the wage and salary cost and improve the efficiency of the system, though there is enough scope to improve further.
CESC has a number of reasons to be happy. First, the tariff has been announced in the second month of the fiscal. This has reduced the arrear billing hazards considerably. However, they will have to compute the arrears for the previous year either for realisation or for refund and adjustment.
Since the tariff commission led by its chairman SN Ghosh feels that both consumers and CESC would require some time for realisation or for refund, the billing for them would start from August 2004 in 24 installments. No interest shall be paid to or by the utility for any realisation, refund or adjustment.
Second, CESC claimed about 11 per cent technical loss in its system and 9.3 per cent non-technical loss for 2002-03; 8.6 per cent for 2003-04 and 7.5 per cent for 2004-05.
Although the commission accepted 7 per cent, seven and six per cent or 75 per cent, 81 per cent and 80 per cent of their claims respectively for those years, these are more than the suggestions made by the Supreme Court in its 2002 judgment.
The apex court had said that the total T&D loss for 2001-02 shall be 18 per cent and for the future, it should be reconsidered by the commission.
For 2002-03, the commission had recommended 18 per cent T&D loss.