![Power Tariff Revision: Power surplus Punjab defies law of supply and demand](https://www.eqmagpro.com/wp-content/uploads/2017/10/download-3-27.jpg)
PATIALA: The law of supply and demand determines the unit price of a particular item in all markets across the world. More the supply less is the price. However, Punjab seems to be defying the basic law of microeconomics as despite being power surplus, the state has increased the cost of electricity by 6.68 % to 12.20%, prompting several protests across the state.
The per unit cost of power in Punjab has gone up ranging between Rs 4.98 (previously Rs 4.52) and 7.36 (previously Rs 6.56) for the domestic supply and from Rs 7.10 (previously 6.53) to Rs 7.47 (previously 6.75) for commercial establishments. The cost of power for the industrial sector has also gone up by ranging between 8.5% to 11.88% as compared to last year.
Punjab has a total installed capacity of 10590.38 MW of power including 7,087.82 MW of fuel based units and 3,648.55 MW of renewable sources. The total power available to the state is 11054 MW, which also includes the state’s shares in several power projects outside its territory. Even after shutting down the Bathinda thermal power plant, the state still has 10594 MW of power at its disposal which is more than required to meet its requirements during the non-peak seasons
The power demand during most of the year floats around 6000 to 8000 MW, other than the paddy season when this demand rises above 11500 MW. This year, the highest demand met was 11681 MW on July 11, when it was at its peak. During other time of the year, the state has a surplus power of 1,500-3,000 MW.
Meeting this increased demand was hardly a challenge for the PSPCL which had entered into a number of sub-contracts to purchase additional power for a short duration ranging from a few days to a couple of months. During the peak season, this year, the PSPCL had around 135000 MW of power available through these sub-contracts.
It even managed to earn a profit of around Rs 25 crore over a period of 15 days by selling its surplus power to other states as the demand soared during the month of September. Power was even sold at a cost Rs 9 per unit, with an average rate of at Rs 4.6 per unit.
But during other months, the demand for power in open markets remains low and the state is unable to sell its surplus power as the average generation cost of one unit of electricity in Punjab is calculated between Rs 3.10 to Rs 3.20, but the same is available in the open market at Rs 2.25 to Rs 2.5 a unit during non-peak seasons.
According to the highly placed sources in the Power Corporation, increase in power tariffs in Punjab is inevitable due to the high working capital of the Punjab State Power Corporation (PSPCL). This year, the PSPCL is expecting a revenue generation of Rs 27142.43 crore as against a net revenue requirement of 32718.64 crore, which leaves a gap of Rs 5576.21 crore.
To fill this gap, the corporation has no other means but to claim tariff hike as revenue from the sale of power is its only source of income, the sources said.
As per the Multi-Year Tariff Petition (MYTP) for the controlled period of the year 2017-18, the corporation had calculated its spending on power purchase to be Rs 17988.67 crore and on generation Rs 4508.44 crore, which sums up to a total of Rs 22497.11 crore.
The remaining revenue requirement is because of other factors including interest on outstanding loans which is Rs 3462.61 crore for the current fiscal, employee cost which is Rs 4338.57 crore and various other components, the sources said.
These sources said that cost of power could only come down if the state government would introduce measures to bring down the net revenue requirements of the PSPCL. They said bringing debts, which are now over Rs 31000 crore, could substantially reduce this requirement, which could even get converted into relief for the power consumers of the state.