Hyderabad: The cross subsidy being collected by the power utilities from various consumers like industries and commercial establishments is likely to be a thing of the past soon.
In the draft energy policy submitted to the Centre recently, NITI Aayog has proposed that the power utilities collect the full market price from all consumers.
The draft policy says: “The power utilities must realise full market price from all consumers by doing away with cross subsidy provided to poor consumers. In many states power is being supplied to the agriculture sector on subsidised rates while some states are supplying power for free. For the domestic sector, states are supplying power at subsidised rates. To fill this revenue gap, the power utilities are collecting cross subsidy from industrial, commercial and other consumers.”
If the Central government accepts the NITI Aayog’s report, domestic consumers would have to pay more for power.
According to the energy department, Discoms in TS get about Rs 3,000 crore through cross subsidy at present. Discoms collect cross subsidy from various types of consumers at different rates. In the current financial year, since the rate of cross subsidy has not yet been decided, Discoms are collecting the cross subsidy as per last year’s tariff
In its report, the NITI-Aayog said that the Discoms should pay the market determined price in full to generation companies and collect the same from power consumers.
“Any apprehension of a rise in tariffs to vulnerable consumers should be addressed through subsidy on power use through Direct Benefit Transfer,” the NITI- Aayog draft said, adding that the eventual goal should be to bring down the cross subsidy from industry, placing the burden directly on the Budget.
This, it said, would contribute to making electricity intensive businesses more competitive.
In the draft policy NITI Aayog said that the projected robust growth in demand comes at a time when many power generation projects that came up in the last few years were in distress due to weak financial health of distribution companies which are in the midst of a turnaround effort, power distributors are not able to fully realise the cost of power supply to consumers due to tight tariff regulation.
