West Bengal Chief Minister Mamata Banerjee expressed concern on Monday over the alleged hike in power tariffs by local private power utility CESC. She said that the CESC had increased the electricity rates without keeping the state government in the loop. But officials in CESC clarified that no change in tariff has been made, but an adjustment was done because of fuel costs in June.
Concerns by Chief Minister
Mamata Banerjee expressed shocked disbelief at the rate increase and claimed that she, too, like the state’s power department, came to know about it for the first time. She said there should be more consultation between CESC and the state government when the prices of essential commodities were already high.
“I heard they have increased the rates, but I have no information on the hike. The power department also doesn’t have any knowledge about it,” said Banerjee, emphasizing the lack of communication. She asserted that the CESC should have consulted with the state government before making any change in the rates.
CESC Explains
Officials of the state power utility explained, “We never revised the tariff. We have only revised the fuel cost for April, leading to a revision of 5.7 percent increase in the bills issued in June”. To put it simply, this is pass-through via tariff adjustment—a standard regulatory practice with utilities—along with fluctuating fuel costs.
“The fuel adjustment for April has effected a 5.7 percent increase in bills for June, from when it was effected,” explained a CESC official. He elaborated that the adjustment did not mean a hike in tariff; it was more on the lines of adjusting the price of fuel, which happened to change.
Present Rates of Tariff
Even with this revision in fuel cost, the gross average tariff would still continue to be Rs 7.73 per unit, CESC officials said. This is also according to the principle on which power utilities revise fuel costs periodically as a way of tackling the pressure of fuel price volatility on electricity generation cost.
Impact on Consumers
Consumers in Kolkata and Howrah have registered an increase in electricity bills due to the fuel adjustment. This, though coming within the guidelines of regulatory provisions, can no doubt cause a lot of anxiety among consumers concerning the already high costs of living. These remarks by the Chief Minister reflect broader worries about the cost of living in relation to access to basic services and the need for transparent communication from service providers.
Background Information on Regulation
Fuel cost adjustments are rather a regulatory mechanism that utilities most often utilize to ensure that, should the price of fuel suddenly surge up or down, this is fairly passed on to consumers. This would not only be for the protection of the financial stability of utility firms but also to ensure that consumers are not put at a disadvantage in case there is such a surge in prices. In doing this, however, effective communication with the stakeholders – including the government authorities and consumers themselves – is very important, lest the move is misconstrued and confidence lost.
The Way Forward:
This incident underlines the clear communication and transparent collaborative ability that must prevail between utility service providers and government machinery. While the state government and CESC are treading through the issue, keeping consumers well-informed and adherence to regulatory practices would be the way forward toward sustaining public confidence in them.