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As the Uttar Pradesh Electricity Regulatory Commission (UPERC) prepares to announce the new tariff for the current financial year any day this week, all eyes are on whether the commission will avoid a tariff hike for the fifth consecutive year.
Indications suggest the regulator may retain the old tariff only for the fifth straight year, while making certain changes in existing tariff categories and bringing more clarity on certain issues.
The last power tariff increase in Uttar Pradesh was made in 2019 when the UPERC announced an average hike of 11.69%. The hike for the domestic metered category consumer was within the range of 8% to 12% while industrial (Heavy) consumer category was given a tariff hike within the range of 5% to 10%. For agricultural metered consumers, the increase was 9%.
Since 2019-20, the regulator has not made any change in the rate schedules.
Now, the UPERC is expected to announce the tariff order for the year 2024-25 before October 9. The regulator is mandated to announce the tariff within 120 days of it accepting the Annual Revenue Requirement Proposal (ARR) from the UP Power Corporation Ltd (UPPCL)/discoms. The 120 days’ time limit will be completed on October 9.
“The chances are that this year too the UPERC may adopt the old rate schedule only, though it may make some changes in other areas and provide relief to the IT sector, fisheries among others,” an energy department official said.
The UPPCL, in its ARR, has projected a revenue deficit of ₹11,203 crore during the current financial year if no tariff revision is made. The corporation, however, proposed no direct tariff hike and left it to the regulator to revise the rate schedule on its own to help it bridge the expected revenue gap.
Broadly, there are believed to be two reasons that stop the commission from increasing the tariff. First the commission feels that the power tariff in U.P. is already on a higher side and any increase might be counterproductive to the government’s policy of affordable power to all.
The commission also believes that the UPPCL should increase its income by plugging losses and increasing billing efficiency, among other things, rather than rely on tariff increase.
Another important reason, as UP Rajya Vidyut Upbhokta Parishad chairman Avdhesh Kumar Verma pointed out, was the surplus revenue generated by the UPPCL by taking greater tariff hike than what was required to meet its expenses in the previous years.
“It is well known that the state’s electricity companies have a surplus of about ₹33,122 crore owed to consumers and the discoms should adjust this amount in consumers’ bills,” Verma said.
He urged the state government to direct the UPERC under Section 108 of the Electricity Act-2003 to reduce the tariff.