A Central government proposal to do away with the cross-subsidy scheme in the power sector may trigger a massive tariff hike affecting about one crore domestic consumers as well as farmers and MSMEs.
As per the draft amendments mooted to the Electricity Act, 2003, the Centre has proposed to initially scale down the subsidy scheme and eliminate it in three years, in phases.
The cross-subsidy rates in States, including Uttar Pradesh and Gujarat, are reported to be much higher than the rates in Kerala.
An open access surcharge being levied on major high tension and extra-high tension consumers is the prime source of revenue for the Kerala State Electricity Board to provide subsidised power to the nearly one crore domestic consumers. The same source is being used to support the farm sector too.
Surcharge at 20%
Major industrial units seeking the Kerala State Electricity Regulatory Commission’s clearance to draw power from generators of their choice now have to pay the surcharge, which amounts to about 20% of the expense incurred for wheeling power from the generator.
Plugging this staple source of income for the board will directly impact the domestic segment, which is now getting power at an average cost of ₹4.50 a unit. This may even lead to a 100% hike, a board official said.
The draft Bill has proposed to progressively reduce the scheme and eliminate it in two years.
Power sector sources told The Hindu that the whole bunch of proposals in the draft Bill were heavily loaded in favour of major private power generators and would cripple the existing distribution system in the State.
Impact on farm sector
Though farmers did not constitute a sizeable component in the State, the proposals would have a serious impact on the farm community that was striving hard for survival and nip the growth of the budding MSME sector. The amendments had been forwarded to the State government for its suggestions.
The Left Democratic Front government, which has already announced a slew of welfare measures for farmers and the MSME sector, will not support such proposals, the sources said.