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UP power regulator gives consumers a shock with 8-15% tariff hike

UPERC says tariff hike was imperative due to increase in expenditure concurrent with decrease in revenue of the state power discoms

The new plan has been put in place after the company's disclosure last week which said its liabilities, advances and net worth are understated

Uttar Pradesh's power sector watchdog today approved 8-15 per cent tariff hike for different categories of rural and urban consumers.

Interestingly, the power tariffs had remained unchanged during 2018-19 in run up to the Lok Sabha elections.

Against the prevailing power tariff of Rs 4.90 per unit for the first 150 units of monthly domestic consumption, UP Electricity Regulatory Commission (UPERC) has increased the slab by nearly 12 per cent to Rs 5.50 per unit.

Likewise, the variable slab for power consumption between 151-300 units, 301-500 units and 500 units upwards have been proposed to be increased to Rs 6 per unit from Rs 5.40 at present, Rs 6.50 per unit (Rs 6.20) and Rs 7 per unit (Rs 6.50) respectively. Additionally, the fixed monthly charge for a domestic connection has also been increased 10 per cent from Rs 100 to Rs 110 per connection.

Besides, industrial (heavy) consumer category attracted tariff hike in the 5-10 per cent range. For agricultural metered consumers, the increase stands at nine per cent for urban schedule and 15 per cent for rural schedule, as per UPERC press communiqué.

The regulator observed the tariff hike was imperative owing to increase in expenditure concurrent with decrease in revenue of the state power distribution companies (discoms).

According to UPERC, there had been decrease in number of consumers that were cross subsidising consumers having lower tariff, apart from increase in Open Access in UP, which would further reduce cross-subsidising consumers. This migration of consumers is expected to increase in future and as such, it was necessary to increase tariffs in the state, it added.

UPERC also referred to increased fixed cost of power purchase and low plant load factor (PLF) for the consequent hike in power tariffs in UP.

Earlier, UP Power Corporation Ltd (UPPCL) and state discoms had submitted annual revenue requirement (ARR) of almost Rs 75,200 crore for 2019-20. However, the UPERC approved ARR of only about Rs 69,489 crore.

After the proposed tariff hike, the state power utilities are expected to earn revenue of about Rs 56,791 crore, while they will also receive subsidy of Rs 9,104 crore from the UP government.

The last power tariff hike was effected in November 2017, when UPERC – while sparing the industrial sector from any increase for 2017-18 – had announced average tariff rise of 12.72% across board. The average power tariff hike was then steepest compared to preceding two years with average hike in 2015-16 and 2016-17 figuring at 5.47 per cent and 3.18 per cent, respectively.

Meanwhile, UP Power Consumers Council president Awadhesh Kumar Verma opposed the steep tariff hike ‘shock’ to consumers. He alleged that the ‘inefficiency’ of the state power utilities should not hurt the ordinary consumer. He also blamed the alleged purchase of costly power for the hike, claiming that cheaper power was available.