SHILLONG, MAR 13: Meghalaya chief minister Mukul Sangma informed the assembly on Thursday that the Meghalaya Public Distribution Corporation Limited (MePDCL) – an entity of the MeECL- has filed a ‘distribution tariff petition’ – with a proposed 89 per cent power hike.
Replying to a call attention motion moved by GNC legislator Clifford R Marak, Sangma told the ongoing budget session of the state assembly, “The MePDCL has proposed an increase of only 89 per cent and 500 per cent in its distribution tariff petition filed for the financial year 2014-2015 filed in accordance with the Act and Regulations.”
Sangma said the tariff hike is essential so that the corporation is able to meet its expenditure to sustain its operation and thereby continue to serve the consumers and the state. He added, “The petition for revised tariff will be determined by the State Electricity Regulatory Commission.”
According to him, MePDCL has also promptly responded to the views, suggestions and objections raised by consumers, departments and citizen group.
Sangma claimed that the power tariffs in neigbouring states like Assam, Tripura and West Bengal are higher than the tariff in Meghalaya and that these states receive substantial revenue subsidies from their respective state governments.
“In case of Meghalaya, there is no revenue subsidy available from the state government, due to which tariff increase cannot be limited by MePDCL,” Sangma informed the house.
Sangma also informed that for the financial year 2014-15, it is estimated that 57 per cent of the total revenue will be required to meet the power purchase cost. “The total power purchase cost of MePDCL is expected to be Rs 489 crore for the financial year 2014-15, and it is estimated that Rs 4.7 per unit of revenue will be required to meet the power purchase cost itself,” he revealed.
Stating that the different costs are required to be met with revenue which will be realised through sales of energy to the consumers, Sangma said, “The growth of energy consumption is nominal in Meghalaya, due to which the high increase in expenses is divided among less number of units of energy, leading to significant increase in per unit tariff.”
In order to limit the tariff hike for domestic category consumer, the tariff increase is offset by cross-subsidy from industrial and other categories of consumers. Hence, the tariffs for non-domestic consumers are higher, Sangma clarified.
Sangma further stated in accordance with the Electricity Act 2003 and National Tariff Policy, distribution utilities are required to gradually decrease the level of cross-subsidy, which effectively means that tariff for domestic consumers will increase to higher rates.
Informing that the MePDCL has high fixed cost of service which is difficult to be met with lower fixed charges recovered from consumers, Sangma said, “Due to this, MePDCL faces difficulty in meeting its fixed expenditures, especially in case there is a downward trend in consumption by high consumption categories of consumers (industrial consumers).”
The chief minister also informed that for the financial year 2012-13, the fixed cost of service was 77 per cent (of total cost) as against fixed revenue of only 5 per cent (of total revenue).
“This shows that the fixed cost is very high in proportion to the total cost, which MePDCL is not able to meet in case of sudden reduction of energy demand as the fixed revenue is very low,” Sangma said.
According to him, the purpose of proposing the increase in fixed charges for financial year 2014 – 15, is to gradually reduce the gap between high fixed cost and low fixed revenues.
Further, the chief minister informed that the MePDCL needs to make payment to Power Grid Corporation Limited (PGCIL), North Eastern Regional Load Despatch Centre (NERLDC) and Meghalaya Power Transmission Corporation Limited (MePTCL) for transmitting the power from generating stations to the distribution network of MePDCL.
The total transmission cost is expected to be Rs 124 crore, which effectively means that Rs 1.2 per unit of revenue will be required to meet the transmission cost, Sangma concluded.-By Our Reporter
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