Date:24/03/2005 URL: http://www.thehindubusinessline.com/2005/03/24/stories/2005032400981700.htm

Back KSEB asked to continue with existing power tariff

Our Bureau

Thiruvananthapuram , March 23

THE Kerala State Electricity Regulatory Commission (KSERC) has asked the Kerala State Electricity Board (KSEB) to continue with the existing power tariffs in the State till further orders.

The board had proposed for 2005-06 an aggregate revenue requirement of Rs 3,826.97 crore and total revenue receipts of Rs 3,334.72 crore, leaving a revenue gap of Rs 492.25 crore. However, the commission has approved Rs 3,367.32 crore and Rs 3,316.01 crore, respectively, with a revenue gap of only Rs 51.31 crore.

Mr M.K.G. Pillai, Chairman of ERC, said here on Wednesday that since the approved level of revenue gap was only 1.5 per cent of the total revenue requirement for 2005-06, it had not suggested any measures for bridging it.

He said that the State Government had told the commission that its comments on bridging the revenue gap would be furnished after the latter's order on revenue requirement and expected revenue receipts. Nevertheless, the Government has not favoured a tariff increase.

He said that the commission anticipated the board's aggregate technical and commercial losses for 2004-05 at 24.61 per cent as against its projection of 24.45 per cent. For 2005-06, the board has proposed a loss reduction target of 2.72 per cent, which has been accepted by the commission.

This will bring down the losses to the level of 21.89 per cent in 2005-06 as compared to the loss levels of 30.76 per cent in 2001-02 and 29.08 per cent in 2002-03.

Mr Pillai said the commission was of the view that the loss reduction achieved by the board was mainly on account of the commercial losses. Consequently, it has issued directions to the board to take steps for separation of technical and commercial losses within two months.

In order to insulate the finances of the board in such circumstances, the commission has allowed the board to make a realistic assessment of the annual shortfall, if any, in hydel generation by the end of October each year and come up with a proposal for recovering the extra power purchase cost through surcharge on the energy charges over a period of one year from November to October next year.

The surcharge shall be levied only after obtaining the specific approval of the commission, which will subsequently consider the finalised accounts/audited accounts to adjust the level of surcharge for periods ahead.

The commission has allowed interest at bank rate (six per cent) for the security deposits of the consumers held by the board. It has incorporated a provision of Rs 35.4 crore on this count in the aggregate revenue requirement of the board for 2005-06.

Mr Pillai said that the commission was seriously concerned over the high level of employee costs and terminal benefits as compared to those in other States. Therefore, it has stipulated that any additional to workforce has to be justified on the basis of productivity norms and efficiency levels. It has also directed the board to formulate a restructuring plan for terminal benefits on a time-bound basis.