The regulator has allowed the Punjab State Power Corporation Limited (PSPCL) to charge full tariff from all categories of consumers, which are being provided subsidized power by the government, in case the government fails to clear the pending subsidy bill and ensure advance payment of all power subsidies.

However, the PSPCL is unlikely to bill subsidized categories with immediate effect.

Pronouncing its order on a petition moved by retired chief engineer of now disbanded Punjab State Electricity Board (PSEB) Padamjit Singh, the Punjab State Electricity Regulatory Commission (PSERC) stated, “Financial distress in the power distribution utility adversely affects the consumers of the state. The Commission has directed in its tariff order (dated April 19, 2018) that the arrears of subsidy as per government’s commitment be paid in advance monthly installments. The Commission notes that the government of Punjab has given a commitment to disburse the entire subsidy to PSPCL. In case there is a default in the disbursement of the subsidy, the PSPCL is free to charge the applicable tariff from the respective subsidized category.”

The commission shot down the plea taken by the state government that interest being paid on delayed payments takes care of the late release of payment against power subsidies, stating it was is not appropriate and such defaults by the government violate Section 65 of the Electricity Act, 2003.

The commission said the delay also affected the cash flow position of the corporation and its ability to make payment for expenditure related to salaries, repair, maintenance, power purchase and other important expenses. Moreover, the utility is unable to raise working capital loans over and above the limit prescribed under the UDAY scheme, said the PSERC.

Petitioner Padamjit claimed there was documentary evidence that the state government had failed in its commitment to release subsidy amounts, year after year. He said as per Section 65 of Electricity Act, free power could not be allowed under such circumstances.

The PSERC noted that as on March 31, this year there was a carry forward of Rs 4,768.65 crore, which when clubbed with the Rs 8,949.37 crore power subsidies that are being doled out during the current fiscal, adds up to Rs 13,718.02 crore.

As per the last tariff order, the state has to release Rs 6,256.09 crore to the PSPCL for providing free power to agriculture power connections, a subsidy of Rs 1,107.69 crore is to be given for domestic supply to schedule caste families, the cost of free power to BPL families is Rs 69.21 crore and that for the backward classes it is Rs 75.43 crore. Small industry gets Rs 61.11 crore free power, while the media industry is getting subsidized power worth Rs 174.90 crore and the large industry in the state is being offered free power worth Rs 1,204.94 crore.

Chairman-cum-managing director (CMD) of the Punjab State Power Corporation Limited (PSPCL) Baldev Singh Sran said the corporation had not yet received the copy of the orders. However, legal experts said it would not be feasible for the power utility to immediately impose the tariffs on the subsidized categories of the consumers.

Experts say the PSERC had put a rider that full tariff could only be imposed if the government failed to release the subsidy without fixing any timeframe for that.

Even if the PSPCL decides to charge full tariff from the subsidized consumers, it would again have to file a separate petition before the PSERC with all the facts and figures before it starts billing the consumers, they said.