Delay in power board unbundling may cost dearly
Rakesh Lohumi
Tribune News Service

Shimla, February 9
The delay in unbundling of the State Electricity Board is likely to cost dearly as the State Electricity Regulatory Commission may not entertain its application for fixing tariff for the year 2009-10.

The commission has so far not admitted the application filed by the board in the last week of November. The main reason for it is that the government has so far failed to respond to the query regarding the status of the board, which ceased to be a legal entity following denial of extension by the Centre for the board to continue in the unbundled form.

In fact, the Union Ministry of Power through a letter had informed the state government that the transmission utility license of the board had expired and it should be ready to face its consequences. The commission subsequently served notice on the government to explain the position.

According to sources, the commission could only determine tariff for a power utility which has a valid license. As such unless the government takes the necessary steps to segregate the functions of transmission, generation and distribution in accordance with the Electricity Act, 2003, and obtains a license the commission will not be able to entertain tariff application of the board.

If stalemate over the unbundling persists the tariff application will not be taken up. As a result the board will be denied the benefit-increased tariff, which will add to its financial woes. More so, as the board has in its application proposed a steep hike in tariff to meet its increasing expenditure and to meet the additional burden on account of the impending pay revision.

The aggregate revenue requirement (ARR) for the year 2009-10 has been projected at Rs 2,853 crore as against the expenditure of Rs 2,021 crore approved by the commission for the current financial year. If approved, the average tariff will shoot up from Rs 3.68 per unit to Rs 4.60 per unit, the brunt of which will have to be borne by the domestic consumers as the power subsidy has been frozen at the level of Rs 140 crore under the agreement signed by the government with the World Bank for availing Rs 900 crore development policy loan.

As such any delay in issuing tariff order by the commission will actually benefit the consumers who will continue to pay at the existing rates until the transmission utility license is restored. However, the financial health of the board will turn from bad to worse.