Amid the hue and cry over the recent announcement of huge hike in electricity tariff for the domestic consumers and lower tariff for industries, the Meghalaya Energy Corporation Limited (MeECL) today said that there has been a misinterpretation regarding the tariff structure announced on October 24 by the Meghalaya State Electricity Regulatory Commission (MSERC) for FY 2024-25.
“There has been a misinterpretation regarding the tariff structure. Contrary to certain interpretations, the tariff order does not increase domestic consumer tariffs to subsidise industrial consumers,” MeECL Director (Finance) Ramakrishna Chitturi said.
“The current tariff order reflects a modest 4 per cent increase in average billing rate for domestic consumers, significantly lower than the 14 per cent hike in FY 2023-24. However, high power usage industries like Ferro Alloys will have seen an increase from 9 per cent in FY 2023-24 to 26 per cent in FY 2024-25,” he added.
According to Chitturi, in FY 2023-24, domestic consumers used to bear 94 per cent of Meghalaya Power Distribution Corporation Limited’s (MPDCL) average cost of supply, but the current tariff order reduces it to 88 per cent of the average cost of supply (FY 2024-25). “This adjustment ensures that the domestic consumers will now pay below the average cost of supply,” he said.
The MeECL official also said that despite the marginal tariff adjustments, Meghalaya’s domestic consumer tariffs remain substantially lower than those in neighbouring states, such as Assam and Manipur.
He also stated that the State Electricity Regulatory Commission determines tariffs based on the Aggregate Revenue Requirement (ARR) for a given year, using projections and assumptions.
“The ARR is subsequently reviewed through a ‘truing-up’ exercise at the end of the financial year, reconciling projected expenses with actual expenditures. Any variance between the projected ARR and actual audited accounts results in either a surplus (if ARR is lower) or a deficit (if ARR is higher). This difference is then adjusted in the tariff for the subsequent financial year. In the context of the current tariff order, the truing-up exercise pertains to FY 2022-23, while tariff determination applies to FY 2024-25. Consequently, any gaps identified during the truing-up exercise are factored into the FY 2024-25 tariff,” he said.
Chitturi maintained that the domestic consumer tariff has increased by a modest 4 per cent this year, significantly lower than the 14 per cent hike allowed in FY 2023-24. Furthermore, he said that the adjustment in the industrial HT category tariff has been offset by an increase in the Ferro Alloy category.
He also said that a marginal increase of Rs 10 per connection per month will be applied to Kutir Jyoti consumers with unmetered connections.
“Notably, the tariff structure for domestic consumers has undergone a significant adjustment. In FY 2023-24, domestic consumers bore 94 per cent of the Meghalaya Power Distribution Corporation Limited’s (MPDCL) Cost of Supply. This financial burden has been reduced to 88 per cent in FY 2024-25. Furthermore, the Commission’s decisions align with the principles outlined in the National Tariff Policy 2016, notified by the Ministry of Power, Government of India which stipulates that the cost borne by each consumer category should be plus or minus 20 per cent of the cost of power. The aberrations in the previous tariff order have been rectified by the current order of the Commission,” Chitturti said.
