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Tamil Nadu re-introduces cross-subsidy surcharge for High Tension consumers- open market power to cost more

According to reports, high tension power consumers, who have been able to avail themselves of cheaper power from the open market instead of drawing their quota from the official power utility – Tamil Nadu Generation and Distribution Corporation (TANGEDCO) – will have to shell out more if they continue to do so.

Till now, these consumers did not have to pay cross-subsidy surcharge when they preferred purchasing power from local private generators and power exchanges to the drawal of their quota from the TANGEDCO. At times, the absence of the levy of surcharge made more attractive the supply from sources other than the Corporation. When power was not available in the open market at an affordable rate, HT consumers would fall back on the TANGEDCO’s supply to meet their requirements and under such circumstances, the Corporation should meet their demand.

This had affected the power utility in two ways – loss of financial revenue when the consumers temporarily migrated out of the TANGEDCO regime and a sudden rise in demand when consumers returned to the fold.

As the authorities have found it difficult to tackle the situation, the State government has decided to re-introduce the levy of cross-subsidy surcharge for HT consumers who do not fulfil their power purchase commitments with the TANGEDCO.

This move has been done to discourage HT consumers from buying power from local generators and power exchanges, according to a senior official. The rates of surcharge have been prescribed by the Tamil Nadu Electricity Regulatory Commission in the tariff order of March 2012 for HT consumers, category-wise and voltage-wise. They vary from 86 paise per unit for a government educational institution to Rs. 2.07 per unit for an industrial unit to Rs. 3.28 for a commercial establishment.

Even now, there is no restriction on HT consumers, even after paying the surcharge, to get power at a price less than the rate at which the Corporation sells power to this category of consumers. The official does not discount this possibility during the period of lean season – November to January. For instance, energy charges for HT industrial units are Rs. 5.5 per unit.

The practice of several industrial units preferring power purchase from the other sources began with the government waiving the levy of cross-subsidy surcharge in February 2009, a few months before the Lok Sabha elections. Then, the government, which termed the waiver as a “special measure,” also allowed private power producers to sell tradable surplus power to HT consumers within Tamil Nadu. These steps were taken to tide over the shortage of electricity prevalent at that time.

In the estimation of the authorities, around 500 HT consumers are now purchasing 460 MW during peak hours and 250 MW round the clock from power exchanges and local generators. If the levy is not re-introduced, the Corporation would suffer a revenue loss of at least Rs. 250 crore annually in the event of HT consumers deciding to buy power from other sources.

Ten days ago, the Energy Department issued an order, cancelling the waiver of the levy of cross-subsidy surcharge. The TANGEDCO has issued a circular, intimating the latest government order to all its field offices.

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