Important Reforms In UP’s Power Sector, Unmetered Rural Customers Nudged To Move To Metering

The Uttar Pradesh Electricity Regulatory Commission has approved several reforms aimed at fixing the fiscal situation of the power sector in the state, which has risen to become the second largest consumer of power in the country, Mint has reported.

In the old system, rural unmetered connections were charged at a fixed rental charge of Rs 180 per month. This is set to be hiked to Rs 300 per month with the aim of nudging consumers to move to metering. The industry tariffs have been kept unchanged, incentivising metered connections.

If the consumers fail to get meters installed untill March 2018, the fixed connection rate is set to go upto Rs 400 per month. Additionally, the regulator implemented an average tariff hike of around 13 per cent last week.

The capital expenditure for financial years 2018 to 2020 has also been raised to Rs 20,000 crore. In comparison, the government spent Rs 9,700 in FY 15-17. At least 81 per cent of this will be invested in new projects.

These steps come soon after the state regulator cancelled two high priced power purchase agreements (PPAs). A task force has also been set up by the authority to assess and cancel the unviable ones signed earlier. While the renegotiations can upset power generators, these mark important steps aimed at improving the fiscal health of the power sector which till recently had been mired in debts.

As power supplies have risen, Uttar Pradesh is already witnessing the highest growth in power consumption in the country. Steps aimed at improving connections, along with the investments in new projects, would help spur economic activity in rural UP.