Power ministry plans cap on electricity price

Power ministry plans cap on electricity price

 The Ministry of Power is working on a mechanism to put a cap on electricity price in order to prevent thermal power generating companies from increasing tariffs and profiteering on the pretext of raw material costs going up after coal block acquisition.

After the Supreme Court ruled that allocation of coal block that figured in the coal scam should be cancelled,  the government is planning to complete the auctioning of 74 coal mines and handing them over to bid winners before March 31.

The Ministry of Power is planning to ask watchdog Central Electricity Regulatory Commission to prevent the companies that have bagged the coal blocks from passing on the additional cost burden to consumers by increasing power tariffs, government sources have told Deccan Herald.

While coal-based power companies have already hinted that they should be allowed to pass on the rising cost of fuel to consumers, experts have cautioned that this would burden the common man. Though the companies are allowed to pass on their burden to consumers, there is a need to put a cap on it so that power-generating firms do not indulge in profiteering, said the sources. 

The ministry also feels that tariff-capping would discourage the firms from indulging in aggressive bidding, and lead to efficient utilisation of coal.

The capping will face resistance from private firms as they claim such restriction could be imposed only if the companies were allotted coal blocks for free. At a time when the companies are paying huge sums for coal blocks, there should not be any restriction on fixing electricity tariffs, said a private firm executive.

The government is also allowing swapping of coal blocks among end-user companies who have bagged them through auction.

After the successful auctioning of 74 blocks, the government would start auctioning the rest of the 214 blocks whose allocations were cancelled by the Supreme Court, sources said.