dna Conversations: Power tariffs need revision

Almost every power producer knows that power tariffs need to be revised upwards. One reason is the surging costs of inputs especially of coal and gas. A second reason is that industry has begun to find solar power cheaper than the price they pay for industrial and commercial power, and thus could reduce their offtake from the grid. That would leave state governments with less money to subsidise cheap power for agriculture and below the poverty line (BPL) families. A third reason is unpaid bills both by consumers and by state distribution companies, threatening to adversely affect power producers. Then there is the problem of losses and theft.

Something needs to be done. Increasing tariffs is one short term solution.

To discuss this, DNA called together a panel comprising (in alphabetical order) G. J. Deshpande, Regional Executive Director, Western Region-I Headquarters, National Thermal Power Corporation; O. P. Gupta, General Manager, BEST [Brihanmumbai Electric Supply and Transport Undertaking]; Ajoy Mehta, Managing Director, Maharashtra State Electricity Distribution Company; S. Padmanabhan, Executive Director, Operations, Tata Power;

Moderated by DNA's R.N.Bhaskar with editorial support from Karishma Goenka, the panel discussed the options that lie ahead.

Given below are edited excerpts:

Padmanabhan: The need for tariff increase is there across the country. Almost all the state distribution companies have accumulated regulatory assets, and there is a definite need. There are many reasons why we are at this stage.

One is there has not been a steady, annual, regular increases in tariff across all the states. Second, there has been an acute fluctuation in fuel prices in the last two- three years, which was never seen before, both in oil and coal prices.

DNA: And now gas.

Padmanabhan: And now gas.

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dna Conversations: Power tariffs need revision