AN abnormally accumulated burden of Rs 43,672 crore is looming large to be imposed on power consumers in Telangana. The failure of the Telangana Rashtra Samithi government to get aggregate revenue requirement and tariff proposals filed before the Telangana State Electricity Regulatory Commission (TSERC) by its two power distribution companies – TSSPDCL and TSNPDCL - for three years from 2019-20 to 2021-22 in time and in the form required under applicable regulations has led to the abnormally accumulated revenue gap.

This is further compounded by the projected revenue requirement of Rs 5,3053.55 crore and the impact of proposed hefty tariff hikes to the tune of Rs 6,830.90 crore for the year 2022-23. The proposed hike works out to 18 per cent over the estimated revenue under the current tariffs of Rs 36,124.51 crore. The subsidy being provided by the government continues to be the same Rs 5,651.65 crore per annum from 2020-21 to 2022-23. 

The DISCOMS have proposed tariff hikes to low tension (LT) consumers at Re 0.50 per unit and to high tension (HT) consumers at one rupee per unit, and increased fixed charges, consumer charges and minimum charges.  It leads to a higher burden in terms of percentage to the majority of the consumers, especially of subsidised categories. 

For four consecutive years ending 2021-22, both the DISCOMS have shown an estimated revenue gap of Rs 36,841.63 crore which they will claim under true-up to be collected from their consumers. If all these accumulated burdens are allowed by TSERC even to the extent they are permissible as per its regulations and imposed on the consumers, what would be the reaction of the people of the state is anybody’s guess. While the policies, decisions and actions of the central and state governments have been mainly responsible for the ever-increasing burdens, the inefficiency and deficiencies in the performance of the power utilities of the state government have their share of the precarious situation. 

The state government has violated the law by not filling up posts of chairperson and members of TSERC within time as stipulated in the Electricity Act, 2003. As a result, TSERC acted as a one-man commission for nearly ten months up to January 9, 2019, and became defunct for nearly ten months up to  October 29, 2019. Even after the present chairperson and members were appointed, the government continued to fail to get ARR and tariff proposals filed before the commission in time and in the form required. The DISCOMS have been forced to violate the law by collecting tariffs as determined in the retail supply tariff order for the year 2018-19 for a part of the subsequent year till TSERC gave its orders allowing them to collect tariffs for that period with retrospective effect and for subsequent years. While revenue requirements and revenue gaps of the DISCOMS kept on increasing, rates of tariffs collected and yearly subsidies provided by the government remained the same. The end result is the accumulation of the abnormal revenue gap.

As a result of the pro-corporate and anti-people measures and policies being imposed on the states under the guise of reforms by the BJP government at the centre, the burdens on consumers are getting multiplied. The cost of generation of power by coal-based thermal stations has been increasing due to the imposition of various taxes by the central government and increasing transportation costs. According to the estimation made in a report of the forum for regulators (FoR) released in May last year, the largest contribution to the cost is the freight cost levied by the railways on transportation of coal. In the power purchase cost, the contribution of coal price has been in the range of 25 per cent, rail freight at 41 per cent, road transportation charges at 11 per cent, clean energy cess at 11 per cent and others at 12 per cent.

In the four private gas-based power stations located in Andhra Pradesh, with a total installed capacity of 1498 MW, the state DISCOMS have a share of generation capacity of 53.89 per cent. These power stations have been stranded since 2013 for the want of a supply of natural gas from KG-D6 fields of Reliance Industries Limited as allocated by the central government. Even after RIL started production of natural gas last year from the wells in the KG basin, the central government has not directed it to supply natural gas to the power stations in AP as per allocations made. 

The Modi government has been refusing to allocate new coal blocks to the public sector utility, Singareni Collieries Company Limited, despite Telangana chief minister, K Chandrasekhara Rao writing to the prime minister to stop auctioning of four coal blocks and allocate the same to SCCL and almost all the trade unions of workers of SCCL went on strike for three days against the move of the central government.

SCCL requested the ministry of coal six years back for allocation of coal from its own mines, instead of from Naini coal block in Odisha, to its Stage I Singareni Thermal Power Project (1200 MW). Despite repeated requests of the Telangana government, seeking allocation of coal from SCCL to its project, there has been no positive response from the centre.

The forum for regulators recommended, inter alia, that the burden of the stranded generation assets should be shared by the central and state governments respectively in the ratio of 60:40, in line with central plan funding. Taking undue advantage of power being in the Concurrent List of the Constitution, the central government has been exercising its authority arbitrarily, without any responsibility and accountability for the adverse consequences and avoidable burdens being imposed on the states and consumers that have been arising as a result of the implementation of its diktats. Despite getting abnormal revenues in the form of various taxes and dividends from the public sector utilities in the sectors of coal, natural gas and railways, the central government has not been providing any financial assistance to the state governments and their power utilities to reduce the burdens on the consumers of power. In the face of the onslaught of the Modi government on the interests of the people at large, public sector utilities, the working class, rights and interests of the states in the power sector, as in other sectors, the TRS government has not been fighting against such onslaughts firmly.

Several power purchase agreements have been entered into indiscriminately with private power generators, with manipulations, and even with NTPC to purchase thermal and renewable energy power at unreasonably higher tariffs. In his letter dated 05.12.2021, addressed to the chief ministers of Telangana and Andhra Pradesh, Dr E A S Sarma, former secretary, ministry of power, the government of India, referred to legislation (Punjab Renewable Energy Security, Reform Termination and Redetermination of Power Tariff Bill)  passed by the Punjab Assembly and suggested, inter alia, that “the states should similarly assert their authority under the Constitution and enact laws that preserve their autonomy in order to safeguard the electricity consumers' interests. Such laws need to be state-specific. In those States where the consumers are unduly burdened by the "deemed generation clause" of the PPAs signed in the past with thermal power plants, the new law could extend to such PPAs also.” 

The capital costs of thermal power projects taken up by TS Genco tended to be very high. Execution of the projects was also delayed for long periods, leading to an escalation in capital cost and interest during construction. As per the latest estimates, the per MW capital costs of various projects are Bhadradri TPS Rs 7.90 crore, Yadadri TPS Rs 7.49 crore, Kakatiya TPP Stage I Rs 5.92 crore, KTPP Stage II Rs 7.233 crore and KTPS Stage VII Rs 6.935 crore. These capital costs are likely to be revised upwards later. Several questionable and manipulated power purchase agreements have been entered into by the DISCOMS during the KCR regime with both the private power generators and trading wings of public sector utilities of the central government, leading to the imposition of avoidable burdens running into thousands of crores of rupees on a long-term basis.

As of June 1, 2021, against a maximum demand of 13,688 MW, the contracted capacity of Telangana state DISCOMS is 16,603 MW. With this capacity, DISCOMS have claimed that they are in a position to meet maximum demand during 2021-22. At the same time, they have projected that the contracted generation capacity would increase to 25,760 MW by 2022-23. Except maintaining in generalised terms that the additional power is required, the DISCOMS are failing to explain specifically the basis for additional requirement of 9,157 MW (25,760 – 16,603 = 9,157) by 2022-23, i.e., an increase of 55.15 per cent, within a span of less than two years. It will lead to the availability of substantial surplus power and payment of fixed charges for surplus power to be backed down. 

TSERC is going to hold public hearings on the ARR and tariff revision proposals of the DISCOMS next month. In view of the limitations and opportunities of the commission under the law, and its regulatory weaknesses, it is for the people at large to protect their interests by opposing the proposed hefty burdens and bringing pressure on the central and state governments through concerted action to force them to correct their policy approaches and actions in the larger public interest.