Power prices the consumers pay to distribution agencies are likely to increase immediately after the Bangladesh Energy Regulatory Commission announces an increase in the rate at which such as agencies will be buying electricity.
The commission’s member Salim Mahmud told New Age that the commission would announce the increase of retail price of power 10 days inside the announcement of the increase in the bulk rate of electricity.
‘Increase in both the bulk and retail rates of electricity will be effective in February. We have no other options but to make the decision quickly as the distribution agencies will, otherwise, face a huge loss because of increase in the bulk rate of electricity,’ he said.
A BERC official told New Age that the commission would announce a 21 per cent increase in bulk rate of electricity this week.
The Power Development Board in November 2010 proposed that the commission should increase the retail price by 16.63 per cent in the first phase to be followed by a 10 percent increase every six months.
As a result, after the first increase, the board will sell power to consumers at an average price of Tk 4.22 a unit — an increase by Tk 0.60 on the current price. At the end of three years, the average price will increase to Tk 6.07 a unit.
In January, a commission official told New Age that ‘the government was trying to increase the retail rate of electricity before the end of winter hoping that people will not become vocal against the price increase’ as there outages are on a limited scale at present.
In November 2010, the power board, which is also the country’s single buyer of electricity from all generation agencies, proposed that the commission should increase the average retail price of power by 44 per cent in six phases over the next three years.
The power board recommended that the rate of increase in the electricity retail price should be higher for those who consume more electricity.
The commission’s chair Syed Yusuf Hossain told New Age that the commission would increase the retail price of electricity less for limited income groups, including for those who need it for irrigation.
A BERC official told New Age that the commission would recommend that the government should give the power board Tk 1,000 crore in subsidy instead of the Tk 600 crore which it currently receives — or alternatively provide an interest-free loan each year, along with a 21.09 per cent increase in the bulk rate of electricity, the board would then break even.
From February, the power board will sell electricity to the distribution agencies at an average rate of Tk 2.87 a unit instead of Tk 2.37.
In its proposal for an increase in the retail price of electricity, the board said that the previous 5 per cent increase in the price of electricity, made by the commission in March 2010, was not sufficient for distribution agencies to pay for the electricity it bought from the power board which in 2008 had been increased by 16 per cent.
In addition, it said that as the bulk rate of electricity was to increase by more than 25 per cent each year for next three years, the retail price had to increase.
At a public hearing on January 19, the commission’s technical committee proposed an increase of electricity bulk rate by 21 per cent.
According to the statistics relating to the 2009–10 financial year, the power board is distributing 24 per cent of total electricity supplied to the distribution agencies at an average price of Tk 3.62 a unit (kilowatt-hour) of electricity.
