Tariff increase in Punjab may be around 10%

14 January, 2013

The tariff increase in Punjab may not exceed more than 10 % despite Punjab State Power Corporation Ltd. (PSPCL) submitting its revised 'Annual Revenue Requirement' for year 2013-14 to Punjab State Electricity Regulatory Commission (PSERC).

POWER TARIFF was hiked by 12.08 per cent by PSERC for 2012-13 which was the second highest increase in last five years. PSPCL had sought more than 50% increase last year to completely offset the losses. This year desired increase by PSPCL is around 60%.

According to sources, PSERC may follow similar pattern and may fix tariff on the basis of current year’s deficit and not on accumulated deficit and this will not exceed 10%. There are many adjustments to be made by PSERC following appellate tribunal’s decisions.

PSPCL has submitted revised Annual Revenue Requirement (ARR) on January 8 this year to Punjab State Electricity Regulatory Commission (PRERC) following the amendment in Punjab Power Sector Reforms Transfer Scheme by the state government On December 24 last.

The revised projected accumulated revenue gap for 2013-14 has been revised from Rs. 12053 crore to Rs. 16039 crore. The net gap for the year 2013-14 has been increased from Rs.2112 crore to Rs.2839 crore.

The revenue requirement for the year has been revised to Rs. 24316 crore from its earlier projection of Rs.23589 crore. This follows revision of return on equity from Rs. 607.55 crore to Rs. 1411.50 crore.
Earlier, PSPCL has suggested an increase of 58.59 per cent in tariff rates for all consumer categories will be required across the board to cover the proposed gap, but PSERC never agrees fully with the projected revenue gap.

The major component in the ARR are power purchase, cost of fuel for thermal plants, employees cost and payment of interest charges. Next year approval power purchase worth Rs. 8680 crore has been sought by PSPCL from commission. The cost of fuel charges has been estimated at Rs.4905 crore whereas employees cost will be Rs. 4370 crore.

PSPCL has been able to reduce transmission line considerably in last three years and this improvement is going to reflect in higher revenue income.