The Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh, told the States that rampant cross subsidisation of power cannot continue.

Inadequate electricity tariff hikes by State distribution utilities (DISCOMs) have weakened their financial position due to rise in the average cross subsidisation of power. This was despite the Centre’s push towards reducing the gap between cost of power procurement and supply.

The muted tariff hikes were implemented despite an increase in establishment costs, coal price and higher demand, according to a presentation at the State Power Ministers’ conference in Gurugram on Tuesday.

According to data shared by the Centre, total subsidy booked during financial year 2016-17 stood at 42 per cent of the total revenue, up from 20 per cent (during fiscal 2015-16). There is a need to reduce this gap, said Singh.

Addressing State Ministers, Singh said, “If you keep pace with the increasing costs, you won’t have to raise the tariffs abruptly. If coal prices go up your tariffs will increase by 3- 4 paise and no body will mind it. If you don’t increase the price in accordance with the coal price and the other costs for five years then after that time you have to have a big jump which everybody will mind.”

Officials from the Ministry of Power said the financial position of Discoms need to improve for them to ensure 24x7 power supplies across the country.

Commenting on the mandate to offer 24x7 electricity supply from April 1, Singh said, “We will hold the States accountable for providing 24x7 power supplies from April. This has been promised in the agreements signed with us.”

Singh said Discoms will have to bill ‘each unit sold’ to ensure that the targets are met.