CESC proposes power tariff hike to West Bengal government

CESC Ltd, the RP-Sanjiv Goenka group company, sees its revenues from power generation going up by 30% in the current fiscal and again by 10% in the next fiscal if the West Bengal power regulator accepts its tariff petition.

While the jump in tariff appears steep compared with what was accepted by West Bengal Electricity Regulatory Commission previously, this time CESC, which supplies power in Kolkata, has a strong case for such a revision as it has to now pay double the price for quality coal it sources from Coal India.

CESC has projected a revenue of Rs5,106 crore for the current year based on a tariff of Rs5.98 per kilowatt hour, a growth of 30% over Rs3,940 crore it earned in 2010-11 from the sale of electricity. Then in 2012-13, CESC would see its tariff going up again, reaching Rs6.28 a kWh, generating revenue of Rs5,610 crore, up 40% over what has been projected for 2010-11.

CESC has asked for three-year tariff plan and in the third year (2013-14) it has not asked any tariff hike. At same tariff of Rs6.28 a kWh, CESC’s revenue in 2013-14 is proposed to go up to Rs5,882 crore, a growth of only 5% over 2012-13.

CESC’s current tariff is Rs5.19 including 46 paise that CESC has been charging for every kWh of power generated since April following price hike announced by Coal India in February.

The tariffs, and consequently revenue from power generation, would go up again if Coal India raises coal prices any time during the period, CESC said in its tariff petition. 

“Any increase in coal prices shall have consequential impact on the proposed tariff,” it said.

The prospect of another round of price hike by Coal India appears imminent in the second half of the current fiscal, as indicated recently by Coal India chairman NC Jha.

CESC has described its tariff proposal as significantly lower than what has been warranted by fuel price increase. It has argued that revenues including the 46 paise monthly variable cost adjustments would increase by a modest 15% to Rs4,420.61 crore in 2011-12, and by 21% at Rs4,627.07 crore in 2012-13.

“Tariff increase proposed for the two subsequent years is significantly lower. The company doesn’t receive any external subsidy at present,” CESC said.

It sources about 13 million tonne of quality B-grade coal from Coal India yearly whose average price has risen from Rs2,801 a tonne to Rs5,584.