Peak-hour power charges to be reduced from 25% to 15%, says MSME Department

The Micro, Small and Medium Enterprises (MSME) Department on Wednesday said peak-hour electricity charges for industries falling under the Low Tension III-B tariff category will be reduced from 25% to 15%.

The MSMEs welcomed the move but said the fixed charges should have been reduced.

The State government had received representations in this regard from MSMEs, and had directed the Department to provide guidance on the issue, according to a statement.

As per the tariff hike, which came into effect on September 10, the peak-hour charges were increased from 20% to 25%. The morning peak hours were revised as 6 a.m. to 10 a.m. instead of 6 a.m. to 9 a.m., and evening peak hours were revised as 6 p.m. to 10 p.m. instead of 6 p.m. to 9 p.m.

V. Thirugnanam, president of Coimbatore District Small Industries’ Association, welcomed the move, but said fixed charges should have been reduced.

“The reduction in peak-hour charges won’t save MSMEs in the State, which are reeling from high input costs and other financial challenges. The MSME owners in the State are upset, and continue to live in despair,” said K.E. Raghunathan, State Advisory Committee member, TNERC, and National Chairman, Association of Indian Entrepreneurs.

“With the increase in fixed charges, a small Industry with 112 Kw as connected load and a monthly consumption of 5,000 units, which was earlier paying a monthly bill of ₹35,670, is now paying more than ₹54,300 – an increase of 52% without considering the peak-hour charges,” S. Vasudevan, an MSME entrepreneur, said.

“Reducing only peak-hour charges will have no impact on the exorbitant increase [in cost]. The ultimate effect will be on the finished product, which will have to compete with [those from] other developing States like Gujarat, Uttar Pradesh and Karnataka. The Tamil Nadu MSMEs are losing to competition due to the recent increase in property tax and electricity charges, which will impact social and economic growth,” he added.

“The Electricity Department should install TOD (Time of Day) meters to calculate peak-hour consumption. But it has said there is a shortage of these meters. Currently, Tangedco is calculating peak-hour consumption for the MSMEs from the total consumption and levying peak-hour charges. It should install the meters so that the MSMEs derive actual benefit from the reduction in charges,” Coimbatore Tiny and Small Foundry Owners’ Association president A. Sivashanmugha Kumar said.

Powerloom units were under a separate tariff category, and hence, the peak-hour tariff for LT III-B consumers did not apply to them, industry sources said.

As per the government order, the Energy Department was directed to issue a policy directive to the Tamil Nadu Electricity Regulatory Commission to provide a subsidy to Tangedco to compensate for the reduction in charges. It also told Tangedco to adopt a proper methodology (verifiable and audit-worthy) for calculating and claiming the subsidy from the government.