CEA proposes  steep increase of fixed charges 

By Vinod Gupta
CHANDIGARH: Domestic consumers' electricity bills might go up soon, even if you're using less power. The power ministry has asked for rationalization of the fixed cost component of tariff.

The Central Electricity Authority’s (CEA) has sought a steep increase in fixed charges payable by consumers as at present it only contributes 9% to 20% of total revenue and power distribution companies struggle to recover costs amid rising rooftop solar adoption and migration of industries to captive power.

The fixed charges proposal mooted by All India Discoms Association, with all private distributing companies and few state utilities as members sought rationalization of fixed charges from the ministry of power . The ministry forwarded a letter to CEA for further action. CEA has asked the forum of regulators to implement it in phased manner.

The proposal means consumers should pay a larger portion of their bill as a compulsory monthly charge, regardless of actual power consumption .

Discom fixed costs such as thermal generation payments ,transmission costs ,employees cost and infrastructure maintenance today account for nearly 38-56% of ARR, while fixed charges contribute only around 9-20% of retail tariff revenue. The power distribution companies continue carrying substantial fixed obligations, though recovery still depends heavily on electricity sales.

As per CEA letter, the fixed cost in case of PSPCL is Rs.11098 crores comprising Rs.7535 crores of fixed component of power cost and transmission and SLDC charges are 4003 crores. This is 53 % of net revenue cost of Rs. 43701 crores. However, the fixed charges contribute 9% of total revenue receipt.

The high paying industrial and residential consumers shift to captive power or open access , they reduce energy consumption but remain connected with the grid . The fixed charges are added to state discom. For low income domestic consumers the increase in fixed charges will lead to high monthly bills.

CEA has initially proposed to increase fixed charges in calibrated and phased approach , 25 % for domestic and agriculture sector and 100 % for industrial consumers in next five years. The discoms should introduce three-tiered standby charges for open access and captive consumer to recover the cost of holding infrastructure for their backup protection.

The report also suggested separate tariff structures for roof top consumers and net metering consumers. This is meant to ensure everyone who relies on the grid, even as backup, helps support power companies fairly.

In the case of Punjab where domestic consumers get monthly free power of 300 units , the increase in fixed charges will increase subsidy burden.