The value of the consumer price index for May will be taken as the basis
Chennai From next year, July will be the month when electricity consumers could experience the annual electricity tariff increase, if the Tamil Nadu Electricity Regulatory Commission (TNERC) approves the proposal of the Tamil Nadu Generation and Distribution Corporation (Tangedco).
Read also: Explained | Electricity tariff revisions and status of DISCOMs
This feature – annual increase in the electricity tariff for all categories of consumers for the next four years (until 2026-27) – was mentioned in the tariff petition filed by Tangedco before the TNERC.
“We have capped the quantum of increase at 6%,” said a Corporation official, adding that the utility took into account a five-year control period, which includes the current fiscal year.
For the current year (2022-23), September 1 will be the date of the rate increase, subject to regulator approval.
The utility offered the consumer price index (CPI) as the base, with May being the reference month. The difference between the CPI value of the year in question and that of the previous year will be taken into account. If it is below the 6% cap, it will constitute the upside quantum. Otherwise, the prefixed figure of 6% will be considered as the increase quantum.
The amount of 6% was cited in the tripartite agreement signed by the state government, Tangedco and the Union government in January 2017 for the implementation of the Ujwal DISCOM Assurance Yojana (UDAY), a program intended for the financial recovery and revival of electricity distribution companies (DISCOM).
The official explains that many other states have followed a similar system for tariff revision or adopted the Wholesale Price Index (WPI) as the basis for calculating the tariff revision quantum.
If Tangedco’s proposed arrangement is allowed, the utility will not file tariff revision applications starting next year until the end of the control period – until 2026-27. It will suffice that by the end of November, the public service submits audited accounts to the regulator.
Although the petition talks about the gap between the annual revenue requirement (ARR) and the projected revenue for the next four years, the gap figures for the years 2023-24 to 2026-27 did not take into account account the amount of the increase, which will be decided by the TNERC each year.
Even after the review, if there is a balance between the ARR and the estimated revenue, the state government is committed to fully absorbing it, the official points out, adding that the balance for the year in course (after taking into account the proposed seven-month rise in the year) will be around ₹16,000 crore.