A consumer group in Tamil Nadu recently approached the electricity regulator to alleviate the 12-hour cuts that cities in the state other than Chennai were facing. Its plea: an equitable approach to power cuts; Chennai has been facing a mere 1-2 hours of power cuts and hogging a good part of the supply. Such situations are pervasive across India. The capital gets regular power supply while the rest of the state is left dark. Perhaps it is time regulators begin considering premium power pricing solutions to alleviate this situation. A lasting solution for power demand in different states is no doubt a difficult one and needs time to address: while new generation capacity is being established, it is not all that easy to import power especially as the transmission corridors are clogged. And once again, capacity creation takes time even if it is on schedule in many parts of India.
In the meantime, what constitutes an equitable solution? After all, consumers in Chennai are in no manner superior to consumers in Kanyakumari at the southern tip of the state—both pay the same tariff.
Regulators have visited this problem in the past. Several years ago, the Maharashtra power regulator set out a code that ensured zero power cuts to Mumbai. Pune again is a no-cut zone. And, perhaps the answer lies in this model. Urban consumers in Pune pay a higher tariff, a premium for uninterrupted supply, as compared with rural consumers around the industrial city.
There is no denying that quality supply is essential in the capital city since key government institutions are located there. However, this needs to be fortified with a stiff dose of pricing rationality. Consumers in Chennai must pay a higher tariff for the superior quality of supply.
This adverse supply situation in the state also offers an opportunity to the state government to push strong reform measures without earning the wrath of the public. It must educate the common man on the reasons for the decay; after all, as recent as the turn of the century, the state enjoyed efficient and reliable supply. What has driven the sector to seed is years of stagnant tariffs besides free power supply to farmers. Citizens need to be constantly reminded about this to ensure that yearly tariff hikes are implemented smoothly. This will help finance new plants, afford purchase of expensive power and keep power cuts to the minimum.
Should India’s “privileged cities” be charged higher prices for uninterrupted supply of power?