Power tariffs hiked; Domestic consumers to suffer near 5 percent increase in monthly bills

Thiruvananthapuram: Kerala State Electricity Regulatory Commission (KSERC) has issued an interim order effecting an average 3.8 percent increase in power tariffs for low tension (LT) consumers and 3.2 percent average increase for high tension (HT) industrial consumers. The new tariffs will come into force from November 1 and will be valid till July 30, 2024.

Within the LT category, the domestic and agriculture segments will have the highest increase. For domestic consumers, who make up 76 percent of the total electricity consumers in Kerala, there will be a 4.7 percent hike; from the existing average cost of Rs 5.13 per unit, the average tariff of domestic consumers will go up to Rs 5.37 per unit.

The biggest increase would be for LT Agriculture users; their average tariff will go up from Rs 3 per unit to Rs 3.20 per unit, a 6.5 per cent increase. The last tariff revision in June 2022 saw a 6.6 percent hike in tariff across all segments. By way of this revision, Kerala State Electricity Board (KSEBL) is expected to mobilise Rs 734.58 crore in the nine months between November 2023 and July 2024.   From domestic consumers alone, it will collect Rs 336.63 crore.

The KSEBL wanted to mobilise Rs 1243.64 crore through the revision. But the KSERC pared it down to Rs 734.58 crore citing anomalies in the public utility’s Annual revenue Requirement (ARR) submission before it. Had the KSEBL wish been granted, power bills would have shot up by 7.4 percent.

How high will tariffs go?
Under the revised tariff, domestic consumers who consume up to 250 units, who together make up 95.39 percent of the total domestic consumers, will have to bear an additional amount ranging from Rs 5 in the lowest 0-50 units per month slab to Rs 58 per month in the 201-250 units/month slab, including fixed charges. 

Nonetheless, households consuming more than 250 units a month will have to pay an additional amount ranging from Rs 90 for those consuming up to 300 units a month to over Rs 200 for those consuming above 500 units a month. 

What will be new low and middle-income tariffs?
Over 95 percent of the one crore five lakh forty seven thousand two hundred and sixty four (1,05,47,264) domestic consumers in Kerala use between 0 and 250 units a month. 

Within this consumption spectrum, there are six tariff slabs: 0-40 units, 0-50, 51-100, 101-150, 151-200 and 201-250. In these slabs, except for the 151-200 slab that includes nearly 12 percent of the total domestic power consumers, the KSERC has granted more than what the KSEBL had asked for. For the 151-200 slab, the KSERC has approved Rs 6.95 per unit while the KSEBL had asked for only Rs 6.90. 

There will be no tariff hike for the lowest slab; those with a connected load of less than 1000 watts and consuming 0-40 units a month, mostly poor households. The tariff in this slab will be retained at Rs 1.50 per unit. The KSEB, too, had not asked for any revision of this slab. 

In the 0-50 slab, in which falls 24.33 percent of domestic consumers, the energy charge has been raised to Rs 3.25 from Rs 3.15 per unit, a 10 paise hike. Their maximum burden a month would be Rs 15. 

In the 51-100 slab, under which falls the largest chunk of doemstic consumers (29.12%), the tariff has increased from Rs 3.95 to Rs 4.05 a unit, a hike of 10 paise. Their maximum monthly increase would be Rs 20.

In the 101-150 slab, which has 24.59% of the domestic consumers, there is once again a 10 paise hike; from Rs 5 to Rs 5.10 per unit. Thier maximum monthly increase would be Rs 25.

In the 151-200 slab, the increase is 15 paise. from Rs 6.80 to Rs Rs 6.95 per unit. The maximum additional amount they have to pay would be Rs 27.

The next slab, 201-250 units, will see a 20 paise rise. What was Rs 8 would now be Rs 8.20 per unit. The maximum a consumer in this slab will have to pay additionally a month will be Rs 35.

What are the new tariffs for first six slabs
Here are the existing and the proposed rates for the first six slabs. 
(Slab - Existing Tariff, in Rs- New Tariff, in Rs) 
0-40 - 1.50 - 1.50 
0-50 - 3.15 - 3.25 
51-100 - 3.95 - 4.05
101-150 - 5.00 - 5.10 
151-200 - 6.80 - 6.95
201-250 - 8 - 8.20 

What are telescopic charges?
Consumption up to 250 units is charged telescopically. This means variable rates, pertaining to the five consumption slabs, will apply while tariff is calculated.  Say for instance a household has consumed 210 units. When the tariff is calculated, the first 50 units will be charged at Rs 3.25 per unit, the second 50 units (from 51 to 100) will be charged at Rs 4.10 per unit and so on.  The benefit of telescopic charges ends at 250 units. 

How does non-telescopic charges affect rich households?
Beyond 250 units, non-telescopic charges kick in. Instead of incremental rates, a flat rate will be used to calculate the tariff. Say a household has consumed 260 units a month. In this case the single rate fixed for the 0-300 units slab (Rs 6.40 per unit) will be used uniformly to calculate the tariff.  Non-telescopic charges are applied in five slabs: 0-300, 0-350, 0-400, 0-500 and above 500. However, less than 5% of the total domestic consumers fall under these five slabs. 

Here are the existing and the proposed rates for the five high-consuming slabs. 
(Slab - Existing Tariff, in Rs- New Tariff, in Rs) 
0-300 - 6.20 - 6.40 
0-350 - 7.00 - 7.25 
0-400 - 7.35 - 7.60 
0-500 - 7.60 - 7.90
Above 500 - 8.50 - 8.80

Are domestic consumers enjoying subsidised power?
The average cost borne by KSEBL to distribute power to consumers - Average Cost of Supply (AcoS) - has been fixed at Rs 7.16 per unit. The money the public utility charges domestic consumers are far less than the ACoS. After the latest revision, the average realisation from domestic consumers will be Rs 5.37 per unit, which is Rs 1.57 short of the ACoS.

The KSERC has been bringing down the cross subsidy over the years. It has been gradually moving towards collecting 80 percent of the average cost of supply (ACoS) from domestic consumers. After the last hike in June 2022, KSEBL has been collecting 74.03 percent of the cost of supply to domestic consumers. Now, after the latest revision, it will be 75.04%.

The annual consumption of the domestic category is about 54.20% of the overall energy consumption of the State. However, the revenue  contribution from the domestic category at the existing tariff is only 42.20% of the overall revenue.

Who bears the brunt of cross subsidy?
It is the LT and HT commercial segments (cinema theatres, multiplexes, shops, showrooms, business houses, hotels and restaurants, service centres, BEVCO godowns, bakeries, photo studios, stadiums, turf courts), and HT Industry that bears the brunt of cross subsidy. Till now they were paying 48%, 50% and 11% more than the cost required to supply to them. After the latest revision, it has come down to 47%, 47% and 9%.