Power demand continues to slide in Uttar Pradesh; experts attribute it to open access

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Updated: March 27, 2019 5:32:06 AM

The country’s most populous state — where aggregate technical and commercial (AT&C) losses of discoms are among the highest — declaring muted electricity requirement also coincides with rising power costs.

Power demand, Electricity requirement in Uttar Pradesh, Saubhagya scheme,UDAY scheme, discoms“We will closely watch the developments in the coming months and see how the power sector absorbs the cost push,” said KPMG India national head energy Anish De.

Electricity requirement in Uttar Pradesh has dropped by 1.6% in the first 11 months of FY19 against the same period in the previous fiscal. This is the seventh straight month when UP’s power requirement has fallen on a year-on-year basis. The dip in demand was more stark in the first two months of 2019 with electricity requirements plummetting 6.6% in January and 11.2% in February.
The development comes amid UP — the largest beneficiary of the Saubhagya scheme — connecting about 75 lakh households through the programme since October 2017.

The country’s most populous state — where aggregate technical and commercial (AT&C) losses of discoms are among the highest — declaring muted electricity requirement also coincides with rising power costs. State energy minister Shrikant Sharma has attributed the fall in power demand to the “result of transparent functioning and awareness of consumers for saving energy”.

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However, sector experts have attributed the fall in demand to the movement of industrial consumers to open access and formalisation of unauthorised connections under Saubhagya. Average power purchase cost for the states which adopted the UDAY scheme increased by 2.4% in six months to Rs 4.30 per unit at the end of H1FY19 owing to the rise in coal and railway transportation prices. The same for UP has increased by 13% to Rs 4.48 per unit in the same period.

“We will closely watch the developments in the coming months and see how the power sector absorbs the cost push,” said KPMG India national head energy Anish De. “A number of these new (Saubhagya) connections were earlier using un-metered electricity illegally and the new meters might have made them conscious about consumption,” an analyst who did not wish to be identified told FE.

The Union power ministry had earlier pointed out that sales migration through open access — where industrial consumers source power from avenues other than discoms — have been impacting discoms’ revenue as well as operations and power procurement planning.

All-India electricity demand in the April-February period, at 1,159 billion units (BU), has registered an annual growth of 5.4%. While Kerala’s electricity consumption has slipped by 0.32% during this period, Chhattisgarh’s power requirement has just inched up 0.6% in 11MFY19. UP’s AT&C losses stand at 31.2% (December-end) against the national average of 19.8%. Additionally, because the state’s electricity regulator had not raised power tariffs adequately, the discom had accumulated regulatory assets worth Rs 33,000 crore at FY18-end. The state departments also owed the discoms another Rs 12,166 crore in September 2018 — recording a 19% annual rise in dues.UP has reduced its FY20 budget expenditure on electricity by about 18% (from FY19RE) to Rs 26,503 crore.

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