Nation Other News 25 Jan 2017 Kerala State Electri ...

Kerala State Electricity Board Limited cites ‘loss’ to win tariff hike

Published Jan 25, 2017, 1:44 am IST
Updated Jan 25, 2017, 6:54 am IST
Truing up sets companies projections for the year against actual expenditure and revenue at the end.
Kerala State Electricity Board Limited
 Kerala State Electricity Board Limited

THIRUVANANTHAPURAM: Now, after nearly three years of steady power tariffs, when KSEB Limited wants a tariff hike, it has put forth a seemingly persuasive logic: a humongous revenue gap of Rs 10,791 crore. A greedy bite of this figure, Rs 7,172 crore, is the loss the public utility claims to have accumulated during 2011-12 and 2012-13.  The problem is, no one except KSEBL is sure of the Rs 7,172 crore gap. The suspicion has been intensified after the Electricity Regulatory Commission estimated that KSEBL enjoys a revenue surplus.   

For the state to be certain that KSEBL’s claim is true, a process called ‘truing up’ has to be carried out. KSEBL had not done ‘truing up’ of its 2011-12 and 2012-13 accounts. (Truing up is an accounting exercise that will set KSEBL’s projections at the beginning of the year against the actual expenditure and revenue at the end of the year so as to arrive at the true estimate of surplus and loss.)   

“Such an act of withholding information is as good as defrauding the consumers; it intentionally creates opacity, offends the principle of transparency and shows defiance of law and legal authorities,” the Electricity Regulatory Commission had stated in an order way back in 2010.  KSEBL has come up with the fat revenue gap after the ERC estimated that the public utility will have a revenue surplus of Rs 166 crore in 2016-17 and Rs 739.17 crore in 2017-18. If there is a surplus, KSEBL is legally bound to reduce tariffs.

But fortunately for KSEBL, the ERC did its own calculations and came up with a revenue gap of Rs 4,500 crore for the 2011-12 and 2012-13 fiscals and shared this loss among future four fiscals, transforming KSEBL’s surpluses to losses: Rs 163 crore for 2011-12 and `633 crore for 2012-13. KSEBL was spared of an embarrassment, yet it claimed that the gap during the period was Rs 7172 crore. Here is what the ERC said in a 2010 order: “It is not desirable to delay the truing up exercise for several years and then spring a surprise for the consumers by giving effect to the truing up for the past several years.” It had then imposed a penalty of `1 lakh on the Board for not complying with the directions to file truing up petitions for the year 2007-08 and 2008-09.

Location: India, Kerala


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