Retrospective Implementation Of New Tariff

By KK Garg (president) and Dev Gupta (general secretary), Induction Furnace Association of North India

Punjab State Electricity Regulatory Commission has announced Electricity Tariff for the current year in October or November of every year and implements it retrospectively from 1st April. This decision is very harmful for steel furnace Industry. Every furnace unit will have to incur losses of which is very difficult to recover. With this retrospective effect every member’s of the association will have to suffer 80 lakh per furnace. No industry/member can absorb any cost increase retrospectively..
The industry is incurring losses year after year and almost 50% units have been shut down due to non viability. In this dismal scenario, the Tariff Order issued by Punjab State Electricity Regulatory Commission for 2017-18 on 23.10.2017, proposed an increase of around 9.33% which has been made effective retrospectively w.e.f 1st April, 2017. PSPCL has been directed to recover the arrears from 1st April, 2017.

It is very clear in The Electricity Act 2003 that Punjab State Electricity Regulatory Commission must declare new tariff rates before 1st April. They have to completed all process of tariff order (Suggestion, Hearing and meeting) on time.
The directions of Hon’ble Appellate Tribunal for Electricity, State Electricity Regulatory Commission is required to issue tariff order by 31st March. The directive to this effect is given by Hon’ble Appellate Tribunal for Electricity in its judgments dated 11/11/2011 on Petition No. OP 1/2011. But PSERC never follow these norms.
EFFECTS OF THE ISSUE
The retrospective effect of the Tariff Order will result in extra burden of around Rs. 650 Crore will be borne by the steel furnace consumers. Steel Industry of Punjab will be heavily affected by the retrospective implementation of the tariff order. In particular Ludhiana small induction furnace unit will pay extra 80 lakh with effect of retrospective implementation of tariff order. Large scale units and arc furnaces will effected as 3 to 5 crore.
Now with retrospective revision of tariff, the industry has been ordered to pay the difference at the rate of around paisa 62 per unit of electricity from their own pocket which it cannot recover from the purchasers. Huge amounts have become payable to PSPCL for this difference.

With this irrational steps furnace industry is totally finished from Punjab. Detail of arrear due to retrospective effect of Ludhiana induction furnace industry is attached herewith for your ready reference.
Induction Furnace Association has already met S.Rana Gurjit Singh Power Minister Of Punjab and S. Manpreet Singh Badal Finance Minister of Punjab and urged them to save Punjab steel manufacturers particularly furnace industries who are in huge crises for last decade as 30% of plants are closed down. More than 30% furnace units are on sale in Punjab and there are no buyers. It all has been happened due to availability of cheaper power in neighbor state. Finished goods like Sarya, Wire Rode, Angal Channal and industrial rounds are easily coming from these states at cheaper rate.