CERS Disputes Energy Minister’s Statement On Tariff Revision
- Posted by CERC India
- Posted in Financial Services
Consumer Education and Research Society (CERS), Ahmedabad, has disputed the Minister of Energy for State, Mr. Saurabh Dalal’s recent statement that the power tariff in Gujarat has not been revised for the past seven years. He had made the statement in the context of a tariff revision application filed by Torrent Power Limited.
Ref. : ER/pr/dG/saurabh.17
Consumer Education and Research Society (CERS), Ahmedabad, has disputed the Minister of Energy for State, Mr. Saurabh Dalal’s recent statement that the power tariff in Gujarat has not been revised for the past seven years. He had made the statement in the context of a tariff revision application filed by Torrent Power Limited.
CERS stated that the tariff is being revised under different heads. The last tariff revision was declared in December 2000 and later the Gujarat Electricity Board (GEB) was unbundled into seven entities. From 1 April 2004 the fixed charges were revised where the Gujarat Electricity Regulatory Commission (GERC) succumbed to pressure and put an additional burden of Rs. 44 crore on residential, Rs. 14 crore on commercial and Rs. 7 crore on industrial consumers, amounting to a total of Rs. 65 crore.
These charges were significantly increased from 2.7 to 22 per cent for single-phase and 10.5 to 55.9 per cent for three-phase residential consumers. Similarly, the fixed charges were increased from 12.1 to 57.8 per cent for single-phase, and from 7.8 to 89.9 per cent for three-phase commercial consumers.
The GERC added insult to the injury of consumers, as it were, by approving a fuel price and power purchase adjustment (FPPPA) formula for four State-owned distribution companies (DISCOMS).
This new formula includes any increase in fuel cost and power purchase costs that may be incurred by DISCOMS. With the implementation of this new formula, DISCOMS are not worried about running their own plants as it is easier to purchase expensive power from independent power producers (IPPS) and pass on the costs to consumers. Roughly the power is purchased at Rs. 4.50 to Rs. 7.50 per unit as against their own generation cost of Rs. 2.55/unit.
The Commission approved this formula, which became applicable from 1 April 2005, and also approved 2 paise/unit as FPPPA charges. Consumers will be shocked to know that from April 2007 these costs have increased to 21 paise/unit, amounting to 4.5 to 8 per cent of increase in the present tariff. If the tariff of the first slab in the residential category is considered as Rs. 2.70/unit, then today same consumers are paying Rs. 2.70 + Rs. 0.21 (FPPPA) = Rs. 2.91/unit, increasing the tariff by 7.8 per cent. If the revision of fixed charges is considered, then the increase in tariff may exceed 10 per cent. Does the Minister still take solace that tariffs have not been revised since 2000?, CERS has asked.
CERS has warned consumers that the day is not far when this FPPPA formula will become a miscellaneous charges adjustment (MCA) formula wherein DISCOMs can include all hidden expenses and pass them on to consumers via the GERC. The common consumer may not understand what fixed charges, variable charges and FPPPA charges are. They only know how much amount they pay on consumption of one unit. Therefore, the power sector should refrain from exploiting consumers in Gujarat.
Date : 06/07/2007 Pritee Shah
Place: Ahmedabad Editor Insight-The Consumer Magazine
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CONSUMER EDUCATION AND RESEARCH SOCIETY
“Suraksha Sankoolâ€, Thaltej, Ahmedabad-Gandhinagar Highway,
Ahmedabad-380 054 (INDIA)
Phone : 079 – 7489945-46, Fax : 079 – 7489947,
E-mail: cerc@cercindia.org, cercindia@gmail.com, Web Site: http://www.cercindia.org
