The Tamil Nadu government, under the leadership of the Dravida Munnetra Kazhagam (DMK), has announced a slight increase in electricity tariffs for the state. Effective from July 1st, 2023, the tariff will rise by 2.18%, as per the multi-year electricity tariff order issued by the Tamil Nadu Electricity Regulatory Commission (TNERC). This decision, attributed to the financial losses incurred by the state’s power distribution company, Tamil Nadu Generation and Distribution Corporation (TANGEDCO), has been met with criticism from opposition parties.
The TNERC, based on the consumer price index, has set the electricity tariff increase at 2.18%, scaled down from the original 4.7% hike, for all electricity connections. The government, however, has emphasized its commitment to the welfare of consumers by providing a full subsidy for the 2.18% increase in residential electricity tariffs. This means that households will not see any increase in their electricity bills despite the tariff revision.
TANGEDCO has been grappling with significant financial losses, which have accumulated over the past decade. The company reported a total financial loss of ₹ 18.954 crore in 2011-12, which ballooned to a staggering ₹ 94,312 crore by 2021-22. This financial strain has forced TANGEDCO to take substantial loans from financial institutions and banks. The loan amount, which stood at ₹ 43,493 crore in 2011-12, has tripled to ₹ 1,59,823 crore in the last 10 years, resulting in a significant increase in interest payments.
The government’s decision to implement a gradual electricity tariff hike is aligned with the guidelines of the Union Ministry of Power, which mandates annual tariff revisions for states to avail funds under the Strengthening of Distribution System (RDSS) scheme. The government has emphasized the need for small annual increases to avoid a sudden and substantial burden on consumers.
Opposition parties, including the All India Anna Dravida Munnetra Kazhagam (AIADMK) and the Bharatiya Janata Party (BJP), have condemned the DMK-led government for the tariff hike. Edappadi Palaniswami, the AIADMK General Secretary, and Annamalai, the BJP State President, have criticized the government’s decision, highlighting the potential impact on consumers. Despite the criticism, the government maintains its stance, arguing that the gradual increase is necessary to ensure the long-term financial stability of TANGEDCO and the continued delivery of reliable electricity to the state’s residents.
