15% electricity duty cut to offset increase in tariff

Jammu, November 24

In a move to alleviate the impact of a 15 per cent tariff increase, the Jammu and Kashmir Power Development Department (PDD) has announced the withdrawal of 15 per cent Electricity Duty (ED) in its revised power tariff.

The decision, effective from December 1 this year, comes following the issuance of a new Tariff Order by the Joint Electricity Regulatory Commission (JERC), J&K.

The JERC implemented a 15 per cent tariff hike while maintaining fixed charges at their existing levels. Notably, the revised overall tariff rate remains below the actual procurement cost incurred by the corporations in supplying power to consumers. “To safeguard consumers from an increase in their electricity bills, the government has taken a proactive step by withdrawing the 15 per cent Electricity Duty previously applied to energy charges in the existing tariff structure,” said an official.

A sample calculation for a domestic consumer consuming 500 units per month reveals energy charges of Rs 2185 (calculated at Rs 3.80 per unit, plus 15 per cent Electricity Duty), fixed charges of Rs 40, resulting in a total electricity bill of Rs 2225.

In comparison, the new tariff for 2023-24 sees an increase in energy charges to Rs 2175 (calculated at Rs. 4.35 per unit), maintaining fixed charges at Rs 40, resulting in a total electricity bill of Rs 2215.

“Notably, despite the 15 per cent tariff increase, the withdrawal of the 15 per cent Electricity Duty ensures no increase in the final electricity bill for consumers,” said the official. He further said that a significant milestone reached by the department is the restructuring of the power department by unbundling the departmental structure into two Distribution Companies (Discoms) and a Transmission Corporation. “This long-awaited reform aligns J&K with other states/UTs, ensuring consumer services are enhanced while ensuring the sustainability of the power sector,” he said.

To facilitate this restructuring, a substantial financial package of Rs 5,000 crore was allocated for a comprehensive upgrade of infrastructure under various Central sector schemes. This investment aims to provide regular and quality power supply to UT people.

To ensure that the newly formed corporations are provided with a clean balance sheet, all the outstanding dues on account of power purchase, accumulated to the tune of Rs 30,700 crore over several years, were taken over by the government and cleared by availing soft loans under GOI Schemes.

“In the present system as well, the discoms continue to grapple with high losses attributed mainly to power theft, poor metering and low tariff rates, which threaten the overall efficiency of the sector. The high Aggregate Technical & Commercial (AT&C) losses, reaching 44 per cent in Jammu and 58 per cent in Kashmir as compared to the national average of 16.44 per cent, have left discoms unable to meet power purchase expenses, leaving aside other critical expenditures like Operations & Maintenance and capital investments, which still continue to be supported by government,” the official said.