UP hikes power tariff, unmetered consumers to see over 63% spike in costs

Uttar Pradesh government on Thursday hiked the power tariff for the current fiscal, increasing the electricity cost on an average by 12.73 percent across all consumer segments, Financial Express reported.

The highest increase in tariff since 2000, which is applicable from December 10, would affect the rural unmetered consumers the most.

The increase the cost for rural unmetered consumers by nearly 63-66.7 percent. The electricity prices for the rural metered consumers, urban domestic consumers, and commercial would go up to 57 percent, 8.5 percent and close to 10 percent.

An unmetered connection is a connection where the charges for electricity consumption are not measured via a meter. They are available on a very limited basis for small electricity loads where the usage is predictable. Usually, these connections get electricity at very cheap or subsidised rates.

The unmetered rural consumer will now have to pay Rs 300 per month as the fixed rental charge as against the current Rs 180. They are expected to install meters by March 2018. After the deadline, the unmetered consumers will have to pay Rs 400 per month as a fixed rental charge.

Accepting that the hike for rural consumers was hefty, Uttar Pradesh Electricity Regulatory Commission (UPERC) Chairman SK Agarwal said the increased tariff for the unmetered rural and domestic consumers will encourage them to shift to metered connections.

For metered rural consumers, it will amount to a hike of Rs 3 per unit for the first 100 units and Rs 3.50 per unit between 100-150 units and Rs 4.50 and Rs 5 for consumption above 150 units.

The industry sector was kept out of the new charges.

The move is an attempt by the Uttar Pradesh Power Corporation’s (UPPCL) to close the gap between the average cost of power supply and the average revenue of the state discoms. According to UPPCL, electricity distributed to around 70 lakh unmetered consumers in villages in the state at a low tariff was causing huge losses to the state discom.

“At existing tariff, the average billing rate for rural domestic consumers is Rs 1.99/unit which accounts for a recovery of only 29.54 percent of the average cost of supply, thus discoms would have to bear a loss of Rs 9,283 crore for FY18 against which the government subsidy of only Rs 3,760 crore is available,” UPERC had pointed in the tariff-hike petition last year.

The increase in the electricity supply to rural areas has increased in the recent past owing to Prime Minister Narendra Modi's several schemes like Saubhagya Scheme that aims at electrification of houses. The supply to rural area has been increased by almost 80 percent to 18 hours from 8-10 hours.

The rural consumers are likely to constitute 20 percent of the total sales projected for FY18 at 18,636 million units, including the increase in supply hours, the discoms added. The projected average cost of supply for FY18, borne by discoms, has increased to Rs 6.97 per unit from Rs 6.35 per unit.

UPPCL had said that the gap between the cost of supply and average revenue realisation had to be reduced and it could have been done only by increasing the tariff of the categories where the tariff is presently low, said the report.

“So far, we had tried to close the gap by cross-subsidisation. But there is hardly any headroom left for a further hike in electricity rates of industrial consumers,” Principal secretary power, and chairman of UPPCL, Alok Kumar said.