‘Cheaper electricity is not all that easy’

Pramod Deo, former Chairperson, Central Electricity Regulatory Commission (CERC) is direct and forceful. He minces no words to put things in perspective. Business Line recently caught up with Deo on the sidelines of a training programme organised by the IPPAI Regulatory & Policy Research Institute in collaboration with the India Smart Grid Forum.

He shared his views on a number of issues. Edited excerpts from the interview.

The success of UDAY (Ujwal DISCOM Assurance Yojana) hinges on States undertaking regular tariff hikes, wherever required.

But, according to ICRA, the average tariff hike for 2016-17 has been only 5 per cent. Does this suggest that we are off the UDAY track?

In 2016-17, Tamil Nadu, Kerala and West Bengal went to the polls. So, you could not have expected them to revise power tariffs. What matters is whether they do it next year. To expect that States would hike tariffs, particularly when they have such an event (elections), is like asking somebody to commit political suicide.

For other States, getting their balance sheets in order and following yearly tariff hikes to reflect the full cost of running their business is important.

The discoms have to also improve their efficiency, for which they will require network strengthening, which will mean incurring capital expenditure. This will finally add to the tariff in later years because the fixed cost gets built into your tariff.

So, to say that tariffs will go down is difficult, unless you are talking only about commercial losses, which can be controlled and do not require any capital expenditure. But, the discoms are government-owned entities and have certain limitations. So, increasing the efficiency dramatically becomes difficult. The employees who are hand in glove with big consumers in pilferage have their own political links.

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