Why do Indians pay three to four times the cost of generating electricity?
Yet, thanks to the inefficiency and bad practices of India’s retail electricity distribution companies (Discoms), the tariffs charged to electricity consumers are often more than four times the cost of generation, or the price that these companies buy from producers in bulk. Allegedly defective electricity meters supplied to retail customers and a misleading reading push up consumers’ electricity bills even further.
In July, thousands of national subscribers in the Kolkata region, including Bengal Energy Minister Sobhandeb Chattopadhyay, complained about a more than 100% increase in their electricity bills. Similar complaints have been filed previously by households in Delhi and Mumbai, all of which are served by powerful private sector Discoms. Incidentally, Maharashtra boasts of the highest electricity tariff (over 10 rupees per unit), closely followed by Madhya Pradesh and West Bengal. Of the three states, West Bengal is the closest to the coal region, the main supplier of thermal power plants.
Despite high retail electricity prices, most Discoms show big losses. These power distribution companies have huge backlogs of unpaid bills from wholesale suppliers, which are invariably in the public sector, with the exception of Tata Power in Mumbai and CESC in Kolkata, among others. Tata Power and CESC are also leading retail distributors.
CESC is one of the most profitable electricity companies. CESC monopolizes the supply of domestic, industrial and institutional consumers throughout the Kolkata region. The supplies in Mumbai are mainly shared between the Tatas and the Adanis. Delhi is served largely by Tata Power and Reliance Infra-controlled BSES