Rising cost of power in Punjab and burden of fixed charges
The average rate of electricity in Punjab is proposed to be raised from ₹6.66 per unit for the current year to nearly ₹8 per unit next year. However, the effective rate for the consumer would be around ₹10 per unit because the state levies amounting to nearly 20% are added to these charges. The annual revision of tariff by the regulator is due from April, which shall be over and above the recent 30 paise hike allowed to recover ₹1,495 crore paid for washing of coal used at private thermal plants of Rajpura and Talwandi Sabo.
Tariff revisions are also carried out midway through the year to compensate for fuel cost adjustments, if any. Besides putting extra burden on the ordinary consumer, it shall also enhance the subsidy bill of the state government, which may cross ₹10,000 crore annually. The Punjab State Power Corporation Limited (PSPCL) has pegged its total revenue requirement for fiscal year 2020-21 at ₹37,250 crore, requiring a 14% hike in tariff.
REASONS FOR HIGHER COST
Collapse of the state sector generation, a phenomenon peculiar to Punjab, is the prime reason for the rising cost of electricity in the state. The generation report ending December 9 of the Central Electricity Authority for the states testifies this fact. The state sector thermal generation capacity in Haryana (2,720 MW), Rajasthan (6,510 MW), Uttar Pradesh (5,400 MW), Gujarat (5,550 MW), Maharashtra (10,170 MW) and Andhra Pradesh (5,010 MW) is in sharp contrast to only 1,760 MW in case of Punjab.
LOW PLANT LOAD FACTOR
To make the matters worse for Punjab, the plant load factor of its state-owned thermal plants, which is a measure for the time the plant remains in operation, is one of the lowest in the country at 16.24% compared to 32.92%, 53.12%, 61.85%, 39.79%, 49.66% and 57.19% for Haryana, Rajasthan, UP, Gujarat, Maharashtra and Andhra Pradesh, respectively. It has resulted in overdependence on power purchases which has reached almost 80% now, and for which, fixed charges are payable even for the electricity not utilised. During 2018-19, a total of ₹976 crore were paid towards fixed charges for surrendering 8,570 million units of power out of total entitlement of 45,793 million units. Similarly, fixed charges incurred on the highly underutilised state sector plants are also adding to the costs.
Theft of power, estimated at ₹1500 crore annually, is a big drain on the revenues of the utility and PSPCL has lost the will and the way to curb it. The losses of high-loss divisions like Bhikhiwind (54.84%), Patti (52%), Tarn Taran (40.71%), West Amritsar (43.13 %), Gurdaspur (32.88%), Batala (38.77%), Patran (36.47%), Jalalabad (36.28%), Baghapurana (35.78%), Malout (52.83%) etc. continue to remain higher.
The efforts for recovery of pending electricity dues from the consumers, which have risen from ₹3,171 crore ending March 2019 to ₹3347 crore ending June 2019, and replacement of defective meters which continue to remain more than 1% are also lacking. As per a report of PSPCL ending June 2019, the percentage metered sales to the power availability has decreased from 60.55% to 57.59%, a disturbing trend indicating increase in theft of energy in the state. The government levies, which are almost 20% (nearly 140 p/unit) in Punjab as compared to Haryana (10 p/unit), Uttar Pradesh (5 p/ unit), Rajasthan (40 p/unit), Delhi (5%), Gujarat (15%), also contribute to the higher cost of electricity in the state.
THE WAY FORWARD
The question remains how to reduce the costs? Saving of the payment of fixed costs to the private plants and fixed costs incurred due to underutilised state plants can be achieved if a workable plan is put in place for reviving the state sector generation. The inefficient state generation assets running at abnormally low plant load factor (permanently closed Bathinda plant and partially closed Ropar plant) need to be disposed of at market prices. The sale proceeds thus accrued should be utilised to infuse equity to acquire efficient generation assets in both coal and renewable energy sectors. By acquiring efficient assets under state sector, twin objectives stated above shall be achieved.
Secondly, theft of power needs to be curbed and transmission and distribution (T&D) losses need to be brought down by 5-6% to the level of 10-12% on the pattern of Andhra Pradesh. The state government can also mull rationalisation of the government levies to provide relief to the consumers. Cheaper and quality electricity is what the consumers desire and the state must explore all options to provide it.
SAVING OF THE PAYMENT OF FIXED COSTS TO THE PRIVATE PLANTS AND FIXED COSTS INCURRED DUE TO UNDERUTILISED STATE PLANTS CAN BE ACHIEVED IF A WORKABLE PLAN IS PUT IN PLACE FOR REVIVING THE STATE SECTOR GENERATION.