20 percent cross-subsidy cap: Industrial power cost to reduce by 14-20 percent

The power ministry’s plan to cap cross-subsidy — additional tariffs paid by industrial and commercial consumers to subsidise households and farmers — at 20%, effective January 2019, could reduce the cost of electricity for businesses by up to 14-20%. At a time when raw material costs are high and pricing power is subdued, this could help companies increase earnings. Among the states, Tamil Nadu keeps the cross-subsidy at the highest level of 60%, while in Uttar Pradesh it is around 40%, one of the lowest. However, the move will dampen the receipts of cash-strapped electricity distribution companies, which, helped by the revival scheme UDAY, are struggling to cut losses.Besides, the ministry’s decision to compute tariffs assuming aggregate t.....