In Near Future: Power Tariff Hike
Experts say coal shortage could make electricity expensive by 20-50 paise per unit; power companies say they are taking measures to mitigate impact
Even as the Centre is utterly heedless to sufferings of the common man with increasing fuel price hike, and Union minister Nitin Gadkari is creating futuristic photo-ops with his EV, the coal shortage in the country could very well mean that even power tariffs will go up in the coming days.
According to experts, there is a high possibility that power distribution companies like Adani Electricity Mumbai Limited (AEML), Tata Power Corporation (TPC) and the Brihanmumbai Electrical Supply and Transport (BEST) would rally behind a tariff hike owing to shortage and expensive procurement linked to the ongoing Russia-Ukraine war. Sources said the proposed hike could be anywhere between 25 paise and 50 paise per unit.
Sources said that AEML, which is dependent on domestic coal for its Dahanu plant, could seek a hike of 25-30 paise per unit. The probable hike sought by TPC could be much higher which generates electricity at Trombay through imported coal and oil.
This isn’t something that will happen very soon, though. Power distribution companies will have to make a detailed presentation to the quasi-judicial body of the Maharashtra Electricity Regulatory Commission (MERC) citing reasons for the hike. Power expert Ashok Pendse said, “We will also demand a public hearing.”
During the Covid-induced lockdowns, when the economy had taken a hit, to ensure there was no adverse hike in electricity bills, the power companies were asked to create a ‘Fuel Adjustment Charge (FAC) Fund’. According to power industry sources, each electric consumer was paying around 18-20 paise per unit in fuel charges, which was adjusted in electric bills. The rise in fuel prices had to be borne by power companies. In absolute amount, FAC kept a lump sum of more than Rs 25-30 crore, though power distribution companies didn’t divulge the exact amount they collected.
An official from a power distribution company, on condition of anonymity, said, “The recent spurt in prices has led to the fund running in negative. We will be forced to recover the hike in coal prices which is used in power plants.”
An AEML spokesperson agreed on witnessing a depletion in FAC Fund. He said, “We have taken concrete steps to provide longterm tariff visibility to our consumers; 100% domestic coal supply to Dahanu ensures that consumers are not impacted by the alarming increase in imported coal prices. AEML is also in the process of procuring additional 1000 MW power with the largest portion coming from renewable energy sources…”
Tata Power spokesperson said they source most of the coal from Indonesia through long-term fuel supply agreement linked to the local indexation. He said, “So, coal sourcing cost is optimised. Apart from this, the supply to Mumbai consumers is a mix through the 180 MW gas-based price which is linked to APM gas, and 440 MW of hydropower which brings down the pool cost of power.”