The Tamil Nadu government has slashed the power tariffs on domestic consumption ranging from 32 to 42 per cent in the different brackets, providing a state subsidy of Rs 910 crore (Rs billion) (Rs 9.10 billion) a year, to this end.
The revision is effective from June 16.
In what may be termed as the sixth U-turn, the tariffs are being reverted to the December 1, 2001, levels, prior to the last tariff revision.
In the post-electoral debacle, Chief Minister J Jayalalithaa has already returned free power to the farmers and hut dwellers apart from reversing five other actions taken by her government in the past.
A statement issued by her pointed out that the government is offering this subsidy to the Tamil Nadu Electricity Board to benefit the 116.57-lakh domestic consumers in the state.
The statement brusquely draws attention to the Rs 5,000-crore (Rs billion) (Rs 50 billion) deficit in the books of TNEB when the current government came in.
Of this, the state government had taken on the arrears of Rs 1,962 crore (Rs billion) (Rs 19.62 billion) that the TNEB owed the central power utilities such as Neyveli Lignite Corporation, National Thermal Power Corporation and Coal India Limited.
In the pursuant years, TNEB also brought down its remaining carry-over deficit by over 47 per cent to Rs 1,603 crore (Rs 16.03 billion) for the fiscal year 2004-05.
Besides the subsidy, the tariff revision is inspired by the reduced deficit, the statement indicated.
The tariff, which is set by the Tamil Nadu Regulatory Commission, is determined by the cost of power supply (which is Rs 3.38 per unit at present) and is also driven by the need to eliminate cross-subsidies within a period specified by the commission.
The tariff at the lower end of consumption within 25 units has been cut from Rs 1.10 per unit to 75 paise per unit.
At the upper end beyond the 301-unit consumption, the per unit tariff revision has been from Rs 4.75 to Rs 3.05. The highest benefit has gone to the consumption bracket between 51 units and 100 units, where the tariff has been slashed from Rs 2.60 to Rs 1.50 per unit.
The tariff levy will be phased for all brackets of consumers. This is to say, a consumer of 50 units of power per month will pay 75 paise per unit for the first 25 units of consumption and 85 paise per unit for 2t h to 50 units.
This will effectively slash the power bill dramatically. On a consumption of 250 units per month, the electricity bill will drop from Rs 750 to Rs 450. On a bi-monthly billing system, the drop will be from Rs 1,440 to Rs 900.