States, CERC at loggerheads

The Central Electricity Regulatory Commission (CERC) in a recent directive asked the states to go for a new tariff rate for sharing of interstate transmission charge of electricity, which created flutter among the state power agencies. Most of the states including West Bengal and Orissa cried foul as this new tariff rate will cause heavy drainage in their revenues. In a meeting convened by the CERC at Delhi yesterday, most of the states refused to accept the new tariff rate for transmission charges and did not sign the agreement. The new tariff rate was to be put in place from July, 2011.

According to the new rule, the power distribution agencies of Eastern and North Eastern states are to suffer heavily. For example, West Bengal will have to shell out Rs.120 crore more annually if the new rule is implemented. As of now, as per the old tariff rule the West Bengal has to pay Rs. 11 crore per month to National Power Grid Corporation for the interstate against the transmission of power On the other hand, the Northern state like Delhi will have to pay less for transmitting electricity from Subansiri Hydel project in Arunachal Pradesh. Now as a result of this introduction of the enhanced cross-subsidy in transmission charge the electricity of Eastern Region will become dearer.

A senior official of state power agency observed, "In the country freight equalisation has been done away in railway transportation to give right price signal to fuel and other raw material. In pipeline based gas transportation also price has been made distance and quantum sensitive. Then, why in the case of electricity transmission we will move in reverse direction by introducing cross subsidy element?"

According to informed sources, in yesterday's meeting the representatives of Orissa pointed out that the state has been providing land, water and coal for creating more power generating stations. In return their state is being punished by imposing this new regulation on them which will definitely push up the cost of power generated in that state.

The CERC member V S Verma tried to deflect the charge by saying that they were raising issues which were political in nature, and should be raised in different forum. But, interestingly, in the ECRC's document containing the 'statement of reasons' for this new regulation, it has justified the new tariff by saying that it "was politically more acceptable."