Power tariff hike likely as NTPC mulls passing on cost burden

Consumers may have to pay more for electricity as state-owned NTPC is set to hike the rates charged for supplying power to the distributors.

The proposed move comes following an 11 per cent hike in coal prices by Coal India, which in turn would push the power generation expenses higher.

Out of a total of 30,000 Mw power generated by NTPC, 26,000 Mw comes from coal-based plants.

"This (the hike in coal price) will have an impact on the cost of power. Naturally, cost of power will go up," NTPC Chairman and Managing Director R S Sharma told PTI.

Entities like NTPC can pass on the increase in input costs for power generation to the distributors. However, the latter would have to get the sectoral regulator's approval to effect changes in their tariff plans.

Each state has its own State Electricity Regulatory Commission, which decides on power tariffs.

According to power ministry sources, the hike in raw material prices is automatically passed on to the distribution firm by the generating company.

Power distributors like BSES and NDPL, which supply in Delhi, said consumers will have to bear the increased cost.

"Ultimately, the end users have to pay but the regulator has to decide," NDPL COO Aroop Ghosh said.

Asked if distributors will approach the regulator, he said, "We approach the regulator at the end of every year but it can (also) take a suo-moto action."

The distributors also said a hike in power tariff to consumers is long overdue.

"We expect the tariffs to be increased by the end of this fiscal keeping in view that the cost of buying power has increased by 90 per cent since 2002, when distribution was privatised, while tariffs have increased by only 26 per cent," a BSES spokesperson said.

Last week, Coal India hiked coal prices by 11 per cent after a gap of about two years, taking coal prices into the range of Rs 448 - Rs 2,500 per tonne.

Besides power, steel and cement companies -- two other primary consumers of the raw material-- may pass on the additional cost burden to the end-consumers.

Cement Manufacturers Association President H M Bangur said, "Because of the move, cost of cement production will go up by about 5 per cent. But we have to now decide whether this burden will be passed on to consumers or be absorbed."