Industrial Power Tariff or Maharashtra Discom or Common Man?

In my previous blog, we did look at the higher industrial power tariff that industries in Maharashtra are facing. To revist: https://bharatvasandani.wordpress.com/2015/02/26/industries-facing-power-issues-in-maharashtra/

While the State Government has agreed to study the prospect of lowering industrial tariff, ICRA has come out with its analysis of tariff petitions for FY 2015-16 filed by distribution utilities in 11 major states.

While discoms in states such as Bihar, Haryana, Madhya Pradesh and Uttarakhand have proposed tariff revision in the range of 15% to 26%, those in other states such as Andhra Pradesh, Gujarat, Maharashtra and Telangana have proposed modest tariff revision in the range of 3% to 8%. Maharashtra proposed tariff revision is 8%

In the analysis, ICRA has pointed out that the revenue gap projected by the distribution utilities for FY 2015-16 is quite significant in most of the states and the reasons for the same include:
a) increase in cost of power procurement and other O&M expenses as proposed for
FY2016 and
b) impact of additional cost estimate arising from final true-up of cost incurred in the previous periods (FY12-14) based on the availability of audited accounts.

Average energy demand growth in industrial segment for FY2015-16 over the sales approved by SERCs in FY2014-15 is projected at 9% based on aggregate estimates by the utilities in 10 states which have filed tariff petitions for FY2015-16. While projected demand growth in industrial segment for FY2015-16 is higher than the CAGR growth of 6.5% between FY 2008 till FY2013, utilities in few states have projected a much higher growth for FY2015-16 which is mainly supported by the increased energy availability (resulting into reduction in load shedding) as well as the favourable expectations on economic growth.

During the period from FY2012 to FY2014, the power purchase cost for utilities across most states has increased at a CAGR of 6-8%, on account
[a] higher mix of power procurement from short term sources due to shortfall in supply from long term sources
[b] increasing fuel costs due to dependence on costlier imported fuel (coal and natural gas) and
[c] higher fixed costs for thermal IPPs commissioned over the last 1-2 year period.

For FY2016, the proposed increase in power purchase cost per unit varies across the states depending upon the fuel source mix of power.

It remains to be seen what the Maharashtra State Government can do in such a scenario to sort both the industrial power tariff challenges and the need to keep the discoms financially viable in 2015-16.

I hope they do not burden the common man with more higher tariffs to compensate for industrial incentive.

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One Response to Industrial Power Tariff or Maharashtra Discom or Common Man?

  1. Arun Sharma says:

    Hi..
    Thank you for posting this blog and sharing this information – we did look at the higher industrial power tariff that industries in Maharashtra are facing.Exel Alternator . I hope they do not burden the common man with more higher tariffs to compensate for industrial incentive.

    thank you

    Like

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