Shimla: Amid outcry over the Himachal Pradesh government’s decision to levy a water cess for hydropower generation and its possible impact on consumers in the form of a tariff hike, the cash-strapped state announced Friday night that it will pay subsidy to the state electricity board.
The Himachal Pradesh Electricity Regulatory Commission (HPERC) Friday issued a statement that the water cess would impact consumers by Rs 1.20-1.30 per unit in addition to the current tariff. Naresh Chauhan, principal adviser to Chief Minister Sukhwinder Singh Sukhu, told ThePrint the CM had made it clear that consumers would not be burdened due to water cess, and the Rs 1.20-1.30 per unit cess assessed by HPERC will be borne by the government, which would amount to around Rs 250 crore.
The state electricity board had filed a petition before HPERC for raising the power tariff by 86 paisa per unit in February. The power regulator took the call on 31 March and increased the power tariff by 22 paisa per unit for the state’s consumers.
The Himachal Pradesh government has imposed cess on water used by hydro power projects in the state. The cess of 10 paise per cubic meter will be charged on hydroelectric projects with head (the height difference between where water enters into the hydro system and where it leaves) up to 30 m; 25 paise per cubic meter for 30-60 m; 35 paise per cubic meter for 60-90 m, and 50 paise per cubic meter for above 90 m.
There are 172 hydro power projects in Himachal, and the imposition of water cess is expected to generate a revenue of around Rs 4,000 crore.
However, according to former MD, Uttarakhand Jal Vidyut Nigam Limited, S.N. Verma, if the government has to pay subsidies to bear the impact of water cess, then talks of revenue generation could be an amateur idea.
“Cess on water used for irrigation, drinking purposes by other states can be justified as the water is consumed. Himachal has imposed cess as a move to fill its coffers, but if it has to pay subsidies to neutralise the impact on consumers, then it is certainly not a good idea for resource mobilisation,” Verma told ThePrint.
Bonafide Himachali’s Hydro Power Developers Association president Rajesh Sharma argued that it’s impractical to expect power generation companies to bear the burden of the cess without increasing electricity tariffs. “The power regulator has assessed the minimum impact of the water cess,” he told ThePrint.
Asked about the impact this move could have on the other states purchasing power from projects in Himachal, principal adviser to CM, Chauhan, said, “The CMs of Punjab and Himachal Pradesh have decided to have a chief secretary-level deliberation on the issue.”
A senior bureaucrat serving in the Himachal government also explained that the state’s power regulator has assessed the impact over Rs 1 per unit and the same impact goes for other states’ purchasing power.
“This would lead to opposition. So far, states were worried only about the water cess, but it could also lead to power tariff hike, or those governments will have to bear the brunt like Himachal Pradesh,” the bureaucrat who spoke on condition of anonymity, told ThePrint.
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Free power scheme for consumption
Besides giving subsidy to the state electricity board, the state government has also decided to continue the free power scheme for consumption upto 125 units.
The state electricity board has more than 22 lakh consumers, of which around 15 lakh have been paying zero bill as they fall in the category of 0-125 units per month consumption.
“Energy charges prevailing at present shall increase by a very nominal rate of 22 paise per unit for all categories of consumers except electrical vehicle charging stations for which it has been increased by 12 paise per unit only,” an HPERC spokesperson said in a statement, adding that the overall electricity tariff increase is less than 4 per cent for FY 2023-24.
The commission has estimated Rs 6,595 crore as the annual revenue requirement (ARR) for THE HP state electricity board limited for FY 2023-24. “The average cost of supply for HPSEBL (Himachal Pradesh State Electricity Board Limited) after truing up is estimated at Rs 5.82/unit for current fiscal,” the state power regulator’s statement reads.
The commission has approved Rs 5.27 paisa per unit for consumption of 125-300 unit per month, and after the government subsidy of Rs 1.10 per unit, the consumer exceeding the 125 unit consumption has to pay Rs 4.17 paisa per unit.
(Edited by Richa Mishra)
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