Year in review: Power took market turn

KOLKATA: Ever since loadshedding became a thing of the past, no year has seen so much development in the power sector as 2002.
The removal of cross-subsidies in the tariff structure is just the beginning.
Cross-subsidy removal was first mooted in late 2001 itself, when the West Bengal Electricity Regulatory Commission observed that it is "ethically against the market economy" and that power tariff should "progressively reflect the cost of supply".
The observation was made when the WBERC pronounced its order on the tariff of state power utility Durgapur Projects.
The provision for removal of cross-subsidy has been there in the ERC Act, but only progressively. However, there was also a provision that the tariffs would come down over the years.
There was no provision for removal of subsidy at one stroke, and indeed no one ever thought till the Supreme Court pronounced its judgement on the CESC tariff that this reality would come so soon.
As things stand today, the new year will not see the issue resolved soon. As the state government has decided to move the High Court against the WBERC’s order, it is clear that whoever loses there would move the Supreme Court.
However, a large number of other major developments in the year have overshadowed this more immediate event.
There are several initiatives launched in distribution sector reforms by the Union power ministry which will have a major impact in the power scenario in the years to come. The biggest move in this is the reforms of the state electricity boards.
These behemoths have long been the seeds of inefficiency and corruption, with the total losses of all the boards crossing Rs 30,000 crores. A move has been initiated to convert these dues, mainly to the central power generating companies, into bonds, along with a definite time frame of clearing current dues.
Another major development has been the Accelerated Power Development and Reforms Programme, in which the SEBs would be getting a matching grant to the extent they can improve efficiency in cutting down losses. In this, the West Bengal State Electricity Board has set a target of breaking even by 2004-05. The Board’s annual losses stand at Rs 800 crore.
Looking ahead, the tariff issue is likely to dominate the power scenario for quite some time, as there are huge political stakes in the supply of power to the rural and agricultural sector.
The Supreme Court verdict, if interpreted by other commissions in the same way as the WBERC, will result in huge increases of power tariff for domestic consumers across the country, which may spark off power riots.
The problem would be more in states with a high degree of mechanical cultivation like Punjab and Haryana. In these states, agriculture constitutes almost 30 to 40 per cent of the total supply, and thus no party would be willing to give up this vote bank overnight.