Bengal power consumers to bearthe brunt of hike in coal prices

Pratim Ranjan Bose Kolkata. March 13 | Updated on March 13, 2011

Power tariffs set to go up by 10-20%

Nearly 1.1 crore power consumers in West Bengal are in for a surge in their electricity bills soon, owing primarily to the recent multi-layered price hike by Coal India Ltd (CIL).

Preliminary estimates suggest that the average tariff of the private sector operator CESC Ltd and the State utility may move up by 50 paise to Re 1 a unit respectively. This is 10 to 20 per cent higher than the existing tariffs of CESC Ltd (Rs. 4.73 a unit) and the State distribution utility (Rs. 4.64 a unit).

Cost escalation

According to sources, generation cost of the State utilities is set to increase by 40-45 paise a unit. The cost push is primarily attributed to doubling the notified price of A and B grade coal (supplied by Eastern Coalfields) to global market price, a straight 20 per cent hike in prices of inferior grade Mahanadi (MCL) coal and an anticipated sharp increase in cost of coal procured (over and above the allocated quantities) from CIL either at negotiated price or through e-auction.

Preliminary estimates suggest that the State generation utility – West Bengal Power Development Corporation – may face a Rs 700-crore cost push annually.

“The impact is magnified due to improvement in plant load factor (capacity utilisation) of WBPDCL in the recent months, leading to higher requirement of coal. The richer coal mix to ensure better performance of plant and machinery has also attributed to the rising cost,” a State official said.

According to a senior state official, having included the distribution costs, including 18 per cent (stipulated) distribution loss; an anticipated escalation in cost of power purchased from NTPC and DVC; cost of imports and; and the tariff order to “regulatory assets” pertaining to tariff petitions pertaining to cost push till 2009-10 should set the average tariff soaring by nearly Re 1 from the existing 4.64 a unit on average.

“Regulatory asset” refers to claims which are accepted by the regulator as valid but not allowed to be realised. In return, the utility is allowed to book the amount as “income”. The State generation and distribution utilities are gearing up to file tariff petitions seeking escalation early in the next fiscal.

CESC situation

Meanwhile, CESC is expecting an overall impact of 40 paise a unit for its own generation (1,200 MW) and distribution. However, the company is dependent on supplies by the State distribution utility to meet nearly one-third of its peak demand of 1,600 MW.

Naturally, the final tariff of West Bengal State Electricity Distribution Company (WBSEDCL) will have a bearing on tariff to be paid by the subscribers of CESC.

Published on March 13, 2011

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