Only 8 states have allowed moderate power tariff hikes: ICRA

Only half the State Electricity Regulatory Commissions (SERCs) out of the 16 states that have issued orders have allowed limited hikes in the tariff orders for 2014-15, ratings agency ICRA said Tuesday.

Pointing out that tariff petitions were filed by the distribution utilities for fiscal 2014-15 in most of the 29 states, ICRA said: "In case of eight states, tariff revision allowed by SERCs has been moderate i.e. in the range of 5-10 percent."

"SERCs in seven states namely Arunachal Pradesh, Bihar, Gujarat, Jammu & Kashmir, Odisha, Uttarakhand and Madhya Pradesh have not approved any tariff revision for the distribution utilities, while SERC in Himachal Pradesh has approved a marginal tariff decline as a result of tariff rationalization," it added.

It attributed the delay in issuing tariff orders in the remaining states partly to the general elections during April-May 2014.

The lack of tariff orders in the states of Tamil Nadu, Rajasthan and Uttar Pradesh, which have implemented the financial restructuring scheme (FRS) to tackle discoms debts, is a deviation that is an area of concern for the sector, ICRA said.

ICRA estimated the subsidy dependence for state distribution utilities at Rs.720 billion for financial year 2015.

"Overall subsidy dependence for FY 2014-15 for distribution utilities in the 16 states (based on the allowed subsidy levels in tariff orders) has also shown an increase by 17 percent over the previous fiscal, mainly on account of upward pressure on cost of power supply and continued subsidized nature of tariffs for agriculture consumers," ICRA said.