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BERC and unfair electricity tariff

BERC is mechanically following the advice of PDB and shifting the raised cost of power generation onto consumers without taking into account the spin-off social, political and economic impacts of this action.

Syed Mansur Hashim
THE Bangladesh Energy Regulatory Commission
(BERC) came into being nearly a decade ago. Its vision statement
reads "for providing energy at just and reasonable cost, and protection of consumers' interest and satisfaction through fair practice." Unfortunately, if one looks BERC's track record over the past year, it has taken steps to the contrary. What has become obvious is that the regulatory body is sorely lacking in technical capacity for analysing the tariff rate under different slabs. The regulator also seems oblivious to higher tariff rate for electricity and its financial and economic implications on consumers both at retail and bulk level. This lack of capacity is perhaps the reason for BERC's continued dependence on outside agencies to come up with formula for tariff regulation, tariff rates and slab fixation.
The latest major revision of the tariff rates that came about in March, 2012, whereby, tariff rates were placed in three slabs that resulted in massive disparity for consumers. Although the revision was advocated by BERC to bring in the big customers under higher payment slab, this did not happen. On the contrary, in real terms, the small and limited user base ended
up paying much more. According to the revised rates, a consumer now pays Tk. 3.05 for 0-100 units; Tk.4.29 for 101-400 units and Tk.7.89 for 401 or above units. It is the average consumer who has seen his/ her electricity bill go grow significantly thanks to these combination and permutation games in calculating tariff slabs.
From what has been reported in the press, BERC is looking now looking at a nine-tier slab to ease the sufferings of consumers that should come into effect from September, 2012. The question is whether this new system will alleviate consumers' suffering or merely add further salt to injury. According to a report published in Prothom Alo on July 27, consumers across the board will be paying higher tariff than the outgoing 3-tier slab. For instance, the consumer utilising 325 units is looking at a 9.76% increase in tariff, while the consumer using 400 units
will see his bill inflated by 7.79%. The real brunt will be faced by consumers who fall in the 425 unit range, for their tariff is set to increase by an astonishing 87.41%. Ironically, it is the heavy duty users who consume 1,000 units and above who will experience a much more tolerable increase in tariff at 24.72%. If we are to take the above calculation at face value, it is clear as day that BERC is fumbling in the dark when it comes to upholding its objective of providing electricity at "reasonable cost." Consumers are being fleeced at will and they have no recourse on the matter. While some may argue that BERC's original plan was to encourage people from consuming less or discourage the wastage of electricity, the reality is that the more a consumer uses, the less s/he pays.
Additionally, readers may recall
that the electricity generation system is now heavily dependent on costly import-based oil fired power plants. Mainly the rental and quick rental plants and the cost of per unit generation from these plants is significantly higher than gas-based power plants' output.
This is causing two-fold subsidies for the government. One: the government is supplying imported oil to the power plants at a fixed rate that is lower than the import price. Two: the government is purchasing power at a higher price and selling it to the consumers at a lower price. As a result, Power Development Board (PDB) and government utility providers are under tremendous pressure and they are trying to use BERC umbrella to shift the cost of power to the consumers. And BERC is mechanically following the advice of PDB and shifting the raised cost of power generation onto consumers without taking into account the spin-off social, political and economic impacts of this action.
Secondly, PDB's power generation cost includes not only the fuel price, but also the operating and maintenance cost and the system losses. So, PDB and utility providers are less interested to operate their plants efficiently. It has thus become a case of passing over the overall their combined inefficiency costs on to the shoulders of the hapless consumers. Here also we see BERC, by legal authority entrusted to protect the rights of consumer --failing miserably to do so.
Given such ground realities, BERC should encourage efficient and sustainable power generation in the country if it truly wishes to live up to its mandate in protecting consumers' rights. With overt dependence on oil-based and costly rental and quick rental power plants, such objectives simply cannot be attained. Till date, BERC has kept mum on the subject of reminding PDB that it has failed to bring in sustainable base-load power plants online. Additionally, the regulator's lack of movement on ensuring the wise use of local fuel sources remains a mystery. It is high time that BERC began to play the role it was designed to, i.e. "to create an enabling environment, efficient, well-managed and sustainable energy sector in Bangladesh."
The writer Is Assistant Editor, The Dally Star.