A rude shock in Andhra Pradesh

The Andhra Pradesh decision to effect a steep hike in power tariffs in the wake of the reforms initiated by the N. Chandrababu Naidu Government has come as a severe jolt to consumers.

A HEFTY hike in power tariffs, which came as an offshoot of the reforms in the power sector that are now under way, has sparked a wave of protests in Andhra Pradesh. Opposition parties in the State are on the warpath, with the Communist parties staging dharnas across the State and the Congress(I)'s agitation beginning with a day-long dharna in front of Vidyut Soudha, the head office of the Andhra Pradesh State Electricity Board (APSEB). The two parties have threatened to intensify the agitation until the power tariffs are rolled back. If the public mood is any indication, the stir will cause considerable embarrassment to the State government if it decides to continue with the reforms.

Although talk of an increase in power tariffs was there for some time, consumers never expected such a back-breaking burden. The power-supplying authority, the Andhra Pradesh Transmission Corporation (APTRANSCO), announced that the hike would be effective from June 4. Several consumer and farmers' organisations have reacted strongly to the increase and plan to join the agitation against it.

The increase applicable to all categories of consumers averaged at 20 per cent though the Cabinet had recommended to the Andhra Pradesh Electricity Regulatory Commission (APERC) only a 15 per cent hike. The worst-hit are domestic consumers, who form the bulk (75 lakhs) of the 1.10-crore clientele of APTRANSCO. The hike ranged from 54 per cent to 122 per cent, depending on the level of consumption.

Domestic consumers using up to 50 units in a period of two months are now required to pay 145 paise per unit, as against 80 paise per unit before the hike. Marginal relief provided to the consumers, by restoring the telescopic system of levying tariff, was, however, offset by the pruning of slabs from six to four. The tariff for the category of 51 to 200 units was increased to 390 paise (pre-hike rates were 120 paise for units 0 to 100, and 165 paise for units 0 to 200). The tariff for the 201-400 unit slab was increased to 615 paise (earlier the tariffs were 210 paise for units 0 to 300 and 290 paise for units 0 to 400). Households consuming more than 400 units are required to cough up 705 paise instead of the present 340 paise. This is the highest tariff levied by any State.

Farmers using agricultural pumpsets in districts covered by the Drought-Prone Area Programme (DPAP) were given the option of using meters and thereby paying 35 paise per unit, or shelling out Rs.200 per horse power (hp) up to 3 hp, Rs. 350 for motors between 3 hp and 5 hp, Rs.450 for meters between 5 hp and 10 hp, and Rs.550 for motors above 10 hp capacity. Farmers in other districts have to pay Rs.250, Rs.400, Rs.500 and Rs.600 respectively, whereas the present rates are Rs.100, Rs.200, Rs. 300 and Rs.400 respectively.

Industry has been spared in relative terms. Low-tension (LT) industrial consumers are subject to a hike of 14 per cent while non-domestic LT consumers are in for a hike of 15 per cent. Cottage industries, with a 35 per cent increase, however, will bear the brunt of the hike. High-tension (HT) consumers among industries bear only a 6 per cent hike.

The APERC admits that the average increase for domestic LT consumers worked out to 54 per cent, for agriculturists to 61 per cent, non-domestic LT consumers to 15 per cent, and HT-I industries to 6 per cent and HT-II industries to 20 per cent, but defends the hike on the grounds that these categories were not affected by earlier revisions.

The public outcry has put the government in a fix. It has little scope to intervene in the pricing of electricity after the A.P. Power Reforms Act came into force. Although the erstwhile APSEB was also an autonomous body, the government dictated the power rates and subsidies. Under the new Act, the APERC is vested with quasi-judicial powers. It is the licensing authority for power transmission and its order is binding on the APTRANSCO, which is a licensee.

WHEN the power hike was announced, a mini Mahanadu, the annual general body meeting of the ruling Telugu Desam Party (TDP), was in progress at Vijayawada. TDP leaders, including Chief Minister N. Chandrababu Naidu, appeared stunned by the tariffs. A damage control exercise was mounted with the constitution of a Cabinet sub-committee to consider ways and means to relieve the burden on the consumers. The government can at best absorb the shock by raising the subsidy to the APTRANSCO.

A comparative study of tariff rates in other States is revealing: a domestic consumer using 200 units pays 390 paise per unit in Andhra Pradesh as against 118 paise in Kerala, 160 paise in Orissa (which has also gone in for reforms), 168 paise in Tamil Nadu and 212 paise in Karnataka. Even if the average consumption is taken as 400 units, Andhra Pradesh tops the tariff list with 615 paise per unit. Tariffs in the State have been hiked four times since 1995. Be it telescopic or non-telescopic, no government has ever attempted to increase the tariff by more than 10 paise per unit for the category of domestic consumers using less than 50 units. In 1992, it was 70 paise for the first 50 units, and this became 80 paise by 1999. In the highest category too, the unit rate never went beyond 75 paise. But now it has gone up by 122 per cent.

The APTRANSCO sought a relief of only Rs.808 crores through the hikes but the APERC was liberal in allowing it Rs.1,095 crores of additional revenue through such hikes. The APTRANSCO's annual revenue requirement for 2000-2001 is estimated at Rs.9,234 crores while the tariff revenue is Rs.5,448 crores. At the current level of tariffs, it would incur a loss of Rs.3,786 crores. It therefore proposed to make good the loss of Rs.500 crores by checking pilferage and technical losses, and gain another Rs.808 crores by way of an increase in tariffs. It expects a subsidy of Rs.2,250 crores but the government has indicated a subsidy assistance of only Rs.1,345 crores.

A public hearing organised by the APERC, the Opposition parties allege, was an eyewash. It was in fact an in camera hearing; the media were kept out. All the 78 categories of consumers who deposed before the Commission, have opposed the proposals. The Commission brushed aside all voices of dissent and strongly defended the hike on the basis of the financial ill-health of the electricity board.

The Congress(I), which promised free power to farmers on the eve of the general elections, argues that the steep hike in tariffs could be avoided if the transmission losses of the APTRANSCO are reduced. Transmission and distribution loss in the State is put at 33 per cent as against the national average of 15 per cent.

The Left parties have vehemently opposed the reforms and allege that they are being pushed through on the diktat of the World Bank. They have also expressed their resentment over the presence of World Bank officials at the APERC public hearing.