New electricity tariff comes into effect from today
The new electricity tariff for the period of three years from 1 January 2017 to 3o June 2019 will come into effect from today.
The approved total cost by Bhutan Electricity Authority (BEA) for Druk Green Power Corporation (DGPC) generation cost and Bhutan Power Corporation ( BPC) ‘s cost of supply is 2.23 Nu/kWh for high voltage (HV), 5.38 Nu/kWh for medium voltage (MV), 5.81 Nu/kWh for low voltage (LV) and 0.195 for wheeling.
However, the annual tariff for LV of Block I (rural) 0-100kWh and Block I (other) 0-100kWh will remain the same.
Block II (all) 101-300 kWh, Block III (all) above 300kWh and LV bulk will have an annual increase of three percent from the existing tariff, while MV will experience an increase of 6.50 percent annually.
The government has approved the subsidy allocation of around Nu. 1,772 million per year to maintain the annual tariff increase for LV and MV consumers.
The per unit subsidy to LV and MV consumer by the government from January is Nu.5.81 for LV Block I (rural) 100 kWh, Nu.4.5 for LV Block I (others) 100 kWh, Nu.3.29 for LV Block II (all) >100-300 units, Nu.2.48 for LV Block III(all) >300 kWh , Nu. 2.02 for LV bulk and Nu. 1.77 for MV.
The difference between the government subsidy and BEA approved total cost of supply shall be imposed on the people as electricity tariff.
When 100 units of electricity are free for people living in rural area, the government has to pay an amount of 5.81 Nu/kWh to BPC.
Article 7.15(3) of Domestic Electricity Tariff Policy 2016, states that the rural domestic households shall be provided additional subsidy with objectives to enhance the living standards, curb rural to urban migration, conserve the environment, reduce fossil fuel consumption and promote income generating activities.
Samdrup K Thinley, CEO of BEA, said that in a calculation of four people in a family using a rice cooker, a boiler, a television set, and a mobile phone charger and around 4 to 5 bulbs of 100 units is enough for a month.
In the urban areas, people who consume 0-100 units in a month will have to pay 5.81 Nu/kWh instead of 1.28 Nu/kWh if there is no injection of subsidy from the government.
Unlike LV and MV, HV does not have subsidy from the government.
Article 7.15(5) of Domestic Electricity Tariff Policy 2016, states that high voltage industries shall not be eligible for subsidy.
The article also states that tariff shall be made affordable to improve the living standards of the people through rationalized and targeted subsidy mechanism.
The CEO said BEA approves the total cost of supply but it is very high so, if government does not subsidize the tariff, people cannot pay the tariff approved by them. He added that DGPC and BPC will be in loss and will not be able to pay the dividend to the government if tariff is lower than the approved total cost.
He also said that if people follow the approved total cost by BEA, in LV, for 100 units people have to pay around Nu.581. But people usually consume about 300 units in a month and that will cost around Nu.1,500, which is very high. So, to make electricity affordable government is injecting subsidy, he added.
LV means voltages of 0.230kV/0.415kV and MV means voltages of 6.6kV/11kV/33kV.
The approval of total cost of supply by BEA was based on the comprehensive review of DGPC and BPC proposal and comments received during the public hearing held on 9 June.
Big industries like those in Pasakha fall under HV category while smaller industries falls under MV and the use of electricity in home, schools and monasteries falls under LV.