Power Pri­or­ity: Stop Pa­tro­n­is­ing Theft

The Economic Times - - Breaking Ideas -

In a disin­gen­u­ous move, state power util­i­ties are re­port­edly jack­ing up spot mar­ket power tar­iffs by up to 40% for large in­dus­trial con­sumers seek­ing “open ac­cess” to the grid. But a highly dis­torted tar­iff struc­ture (read: pe­nal tar­iffs), with the ex­press pur­pose of de­ter­ring cross-coun­try power ex­change via open ac­cess, is re­ally no re­form. The way ahead is for politi­cians to stop pa­tro­n­is­ing power theft and bring down run­away rev­enue leak­age in power dis­tri­bu­tion pan-In­dia so as to have a proper mar­ket for power. It would then make em­i­nent sense for ef­fi­cient pro­duc­ers to gain­fully seek cus­tom via open ac­cess to the line net­work, for a rea­son­able fee. And at­tempt­ing short­cuts like steep open-ac­cess charges, never mind huge dis­tri­bu­tion losses of state power util­i­ties, would be thor­oughly sub­op­ti­mal, and can short-cir­cuit the sys­tem. The Elec­tric­ity Act, 2003, was in­tended to bring in in­de­pen­dent over­sight put paid to po­lit­i­cally man­dated tar­iffs and gross pop­ulism in power. But it has now been shown that state power reg­u­la­tors may not re­vise tar­iffs for years, to re­main in the good books of the pow­ers that be. And such a mind­set needs prompt over­haul­ing. The idea that power can be sup­plied gratis or dirt cheap with the right po­lit­i­cal pa­tron­age needs to be junked who­lescale.

Yes, there is cer­tainly a case for lim­ited, bud­geted sub­ven­tions for power. But gross open-ended sub­si­dies just make no sense. Such poli­cies can bank­rupt en­tire state trea­suries and lead to en­vi­ron­men­tal dam­age like fall­ing wa­ter tables. Pac­ing re­forms in the pol­icy-chal­lenged power sec­tor is vi­tal. What’s re­quired is reg­u­lar dis­clo­sure of power util­ity re­sults prior to im­ple­ment­ing rou­tine open ac­cess. A proper mar­ket can wait, pend­ing ba­sic power tar­iff re­form.

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