The levy of fuel surcharge adjustment on power consumption is essential to maintain the financial health of power utilities, according to the Andhra Pradesh Government.

In a release justifying the levy , the Energy Department said the surcharge was included to compensate for the increase in the cost of power procured for electricity consumers, as against the costs fixed by the Andhra Pradesh Electricity Regulatory Commission in the tariff order.

The increase was the result of a decline in domestic coal supply, leading to higher usage of more expensive imported coal and the rupee exchange rate fluctuation, which was resulting in higher price of domestic gas, it said.

Further, the decrease in the quantum of gas meant only 35 per cent of the total installed capacity of gas-based plants could be put to use, leading to higher energy deficit.

Power procurement on short term basis from expensive sources was essential for maintenance of quality power supply, the energy department said, adding: “Hence, the additional cost incurred to maintain quality power supply is passed (on) in the form of the fuel surcharge adjustment.’’

An amount of Rs 1,400 crore has been spent to purchase power at the increased cost.

Levying of the fuel surcharge is not a new phenomenon and is being followed after due approval of the Commission as per Regulations for the past many years, the release said.

There has been severe opposition to the levy.

>nagsridhu@thehindu.co.in

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