Covid-19: Uttar Pradesh govt decides not to increase electricity tariff in state

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May 29, 2021 3:00 AM

“If there is a deficit in ARR, someone has to foot the gap, either by the consumers or by the government. If the government does not want to pass on the gap to the public, it has to give it to us in writing that they are ready to fill that gap through subsidy,” said the official.

However, the power ministry has termed such estimates as “grossly inflated”. Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.However, the power ministry has termed such estimates as “grossly inflated”. Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.

In view of the Covid situation, the Uttar Pradesh government has decided not to increase the prices of electricity in the state. In a meeting with key officials, chief minister Yogi Adityanath directed them to ensure that there is no increase in electricity prices this year.

“The chief minister has given a general direction that the electricity rates will not be increased. The matter is with the regulator at present. Once the regulator decides on it, the government will take a view on it,” said a senior official of the government, who was present in the meeting.

The direction comes at a time when the Uttar Pradesh Electricity Regulatory Commission is in the midst of preparing the tariff based on the annual revenue requirement (ARR) filed by the Uttar Pradesh Power Corporation.

However, a UPERC official told FE that the chief minister’s direction “is a non-event for the Commission, unless and until it comes by way of a written communication from the government, accompanied with subsidies as per Section 65 of the Electricity Act.

“If there is a deficit in ARR, someone has to foot the gap, either by the consumers or by the government. If the government does not want to pass on the gap to the public, it has to give it to us in writing that they are ready to fill that gap through subsidy,” said the official.

Earlier, in February this year, the five power distribution companies (discoms) of UPPCL  — Madhyanchal, Paschimanchal, Poorvanchal, Dakshinanchal and KesCo — had filed their annual revenue requirement (ARR) proposal to the UP Electricity Regulatory Commission, projecting a total revenue requirement of Rs 81,901 crore during 2021-22. It included an estimated expenditure of Rs 62,020 crore on the purchase of 1,20,043 million units (MUs) of electricity during the year. The UPPCL had also pegged the distribution losses at 16.64% for 2021-22 against the 11.08% approved by the UPERC in its last tariff order.

It may be mentioned that the electricity regulator had rejected UPPCL’s demand for power hike in the last fiscal year, citing the adverse financial impact due to the pandemic on the livelihood, commercial and industrial activities and the reduced paying capacity of consumers due to expected contraction in GSDP.

In a recent letter, the Union power ministry has asked a number of states, including Uttar Pradesh, to issue tariff orders for FY22 “at the earliest” for their power distribution companies (discoms). Irregular tariff revisions limit the discoms’ ability to become financially viable, which, in turn, leads to delayed payment to power generators and makes it difficult to maintain and upgrade their own network and systems, it had stated.

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