Tamil Nadu Issues Multi-Year Electricity Tariff Order, Introduces a Green Tariff of 10%

The cross subsidy surcharge for HT industrial consumers for FY 2022-23 is ₹1.79/kWh

September 15, 2022


Retail electricity tariffs for high tension (HT) consumers have gone up by 6% to 18% in the recently announced order by the Tamil Nadu Electricity Regulatory Commission (TNERC) for the financial years (FY) 2022-23 to 2026-27.

The tariff applicable to all HT manufacturing and industrial establishments and registered factories (HT I-A) is ₹6.75 (~$0.085)/kWh, hiked by 6%.

The tariff for government educational institutions, hospitals, railways, and lift irrigation societies (HT II-A) is ₹7 (~$0.088)/kWh, an increase of 10%.

Private educational institutions and lift irrigation societies (HT II-B) will have to pay ₹7 (~$0.088)/kWh, an increase of 18%. The tariff applicable to the commercial category (HT III) is ₹8.5 (~$0.11)/kWh, a 6% rise.

Public electric vehicle charging stations will have to pay ₹8 (~$0.10) – ₹12 (~$0.15)/kWh, depending on the time of day. To encourage consumers to charge their vehicles during solar hours and non-peak hours rather than peak hours of grid demand, the charges during solar hours and non-peak hours are incentivized through a time-of-the-day-based tariff. This measure will also help in flattening the load curve, thereby helping the grid maintain the stability and voltage profile

The tariffs will be revised every year from July 1.

Electricity Tariff for Commercial and Industrial Consumers in Tamil NaduReasons behind tariff hike

The Ministry of Power has mandated tariff revision to release funds under the Revamped Distribution Sector Scheme (RDSS). If tariffs are not revised, grants to the tune of ₹107.93 billion (~$1.35 billion) will not be released to Tamil Nadu Generation and Distribution Corporation (TANGEDCO).

The Reserve Bank of India has also directed commercial banks to lend to state-owned power entities only if they file tariff petitions by November 30 every year.

Regulators like the Central Electricity Regulatory Commission and Appellate Tribunal for Electricity have taken a dim view of the non-revision of tariffs by TANGEDCO and the accumulation of dues to generation companies, suppliers, and contractors. The ranking of TANGEDCO has declined due to non-cost reflective tariffs, which in turn restricted the banks not to lend any further loans.

TANGEDCO had no choice except to revise the tariff after eight years.

Green tariff

The Commission has accepted the proposal to introduce a renewable energy-based ‘Green tariff’ for HT services. The green tariff would be an additional 10% over the HT category’s respective tariff.

TANGEDCO had proposed to charge a 150% green tariff. However, the Commission deemed this to be very high and noted that states Telangana and Andhra Pradesh were charging ₹0.66 (~$0.0083)/kWh and ₹0.50 (~$0.0063)/kWh extra for Green energy, and Maharashtra ₹12.25 (~$0.15)/kWh for green energy tariff.

Wheeling charges

The wheeling charges for HT consumers for FY 2022- 23 will be ₹0.96 (~$0.012)/kWh, increasing to ₹1 (~$0.013)/kWh in FY 2023- 24, then to ₹1.04 (~$0.013)/kWh in FY 2023- 24 to FY 2025- 26. The wheeling charges for HT consumers for FY 2026- 27 will be ₹1.03 (~$0.013)/kWh.

Cross subsidy surcharge

The cross subsidy surcharge for HT industrial consumers for FY 2022-23 is ₹1.79 (~$0.023)/kWh. The cross subsidy surcharge then increases to ₹1.86 (~$0.023)/kWh for FY 2023-24, ₹1.92 (~$0.024)/kWh for FY 2024-25, ₹1.99 (~$0.025)/kWh for FY 2025-26, and ₹2.06 (~$0.026)/kWh for FY 2026-27.

The cross subsidy surcharge for HT commercial consumers for FY 2022-23 is ₹2.33 (~$0.029)/kWh. It will go up to ₹2.41 (~$0.030) /kWh for FY 2023-24, ₹2.49 (~$0.031)/kWh for FY 2024-25, ₹2.57 (~$0.032)/kWh for FY 2025-26, and ₹2.66 (~$0.033)/kWh for FY 2026-27.

Grid availability charges

Grid availability charges will be levied in case of outages attributable to generators supplying to open access consumers. They will be applicable for startup power by generators or when the generators are not mentioned as per the schedule, and the drawal by the open access consumer is in excess of the schedule.

Additional surcharge

The Commission will determine the additional surcharge for open access consumers after the filing of separate petitions every six months.

Tamil Nadu ranks third in cumulative solar open access installations as of Q2 2022. Tamil Nadu witnessed a surge in open access installations, with a 69.7% increase compared to the previous quarter. The state accounted for 11.1% of solar open access capacity added in the country in Q2 2022. The numbers were revealed in Mercom India’s Mercom India Solar Open Access Market Report Q2 2022.

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