Punjab electricity rates could surge by up to 11%

Electricity consumers in Punjab may be in for a major shock as the state government is considering increasing electricity rates by up to 11%. Powercom has proposed this in its Annual Revenue Requirement Report (ARR) sent to the Punjab State Electricity Regulatory Commission. The commission is expected to greenlight it soon. However, Powercom officials argue that this would be the least increase in electricity rates over the past 15 years since Powercom’s establishment in 2010. They also note that domestic consumers are already receiving the first 300 units of electricity for free, and the agricultural sector is also benefiting from free power. Therefore, the impact of the rate increase would primarily fall on businesses and industries.
According to the report, Powercom’s accumulated revenue deficit is projected to be Rs 5,400 crores by the end of the financial year 2024-25. The primary reason for this deficit is the one percent reduction in electricity rates by the former Channi government in 2021, followed by no increase in rates by the subsequent Mann government in 2022. This resulted in a revenue deficit of around Rs 6,300 crores for Powercom in the financial year 2022-23.

Expense for salaries increases by Rs 1,700 crores
The nationwide coal crisis in the financial year 2022-23 led to an increase in the cost of procuring coal from external sources, raising the purchase cost of electricity by Rs 4,000 crores. There was also a hike of Rs 600 crores in transmission charges. Additionally, due to the implementation of the Sixth Pay Commission, the expenditure on employee salaries increased by Rs 1,700 crores.

Subsidy to reach Rs 22,000 crores
Electricity subsidy in the financial year 2024-25 is expected to reach Rs 22,000 crores. This includes a subsidy of Rs 9,000 crores for providing 300 units of free electricity to domestic consumers, Rs 3,000 crores for the industrial sector, and up to Rs 10,000 crores for the agricultural sector.

Revenue expected to exceed expenses by Rs 1,550 crores
In the financial year 2024-25, Powercom is projected to have revenue exceeding expenses by Rs 1,550 crores. The revenue requirement for Powercom by the end of the financial year 2024-25 is estimated to be Rs 46,400 crores, compared to an expected revenue of Rs 47,950 crores based on the existing electricity rates. Despite the previous accumulated revenue deficit, Powercom has proposed an increase in electricity rates.

Electricity rates to rise without cuts, urges Secretary
According to Engineer Ajaypal Singh Atwal, Secretary of the PSEB Engineers Association, considering the rising expenses of Powercom, the government should definitely increase electricity rates. He suggests that the rates should be increased without any cuts to ensure uninterrupted power services. Atwal emphasizes that the government did not raise electricity rates for two to three years before this year. This has resulted in a significant loss of revenue for Powercom, which can only be compensated by raising rates.