The Bangladesh Energy Regulatory Commission at a press briefing in its office on Tuesday increased both the retail and bulk prices of electricity with effect from February 1.
The commission increased the retail price of electricity without any open meeting and public hearing.
Consumers will now need to pay to the power distribution agencies at a rate 5 per cent higher than the current price under an interim arrangement after the announcement of the increase in bulk rate of power.
The commission increased the average bulk rate of electricity at which the Power Development Board will sell electricity to five distribution agencies, including the power board itself. The increase by 11 per cent in the first phase will be effective from February and by 6.66 per cent in the second phase effective from August 1.
As a result, the bulk rate of electricity will increase by 18.14 per cent in a year. The power board will then sell electricity to the distribution agencies for Tk 2.8 a unit instead of the existing Tk 2.37 in force till January.
At the same time, the commission asked the government to give the power board Tk 1,500 crore in subsidy so that the board could break even.
The commission chair, Syed Yusuf Hossain, at the press briefing said that they had changed their recommendations for increasing bulk rate of electricity by 21.81 per cent with Tk 1000 crore being given to the board in subsidy at the advice of the government.
In reply to a question about the curtailment of the independence of the commission, commission member Salim Mahmud said that there were provisions for both the parties to make suggestions for each other in greater interest.
The commission, however, did not give any direct answer when it was asked whether it would recommend that the government should not go for expensive fuel oil-fired power plants for which the power board’s revenue requirement will increase to Tk 9,308 crore in the 2010–11 financial year.
Yusuf said that the commission would set the retail price of electricity within a month on receiving the proposals from the power distribution agencies for the retail price of electricity.
He said that the commission had kept residential consumers using use less than 100 units (Kilowatt-hour) each month, irrigation connections and connections to non-residential religious, social and educational institutions out of the purview of the retail power price increase.
He said that the commission also recommended that the government should keep additional fund in the budget for the Rural Electrification Board as 90 per cent of the irrigation pumps are run in the coverage area of the electrification board.
According to the new power tariff for retail consumers, residential consumers using between 101 and 400 units a month will need to pay Tk 3.47 a unit instead of the existing Tk 3.30 and consumers using more than 400 units a month will need to pay Tk 5.93 a unit instead of the existing Tk 5.65.
In the flat rate, small industries will pay Tk 4.57 a unit instead of the present Tk 4.35, commercial and office consumers will pay Tk 5.86 a unit instead of the existing Tk 5.58, medium voltage (11kv) consumers will pay Tk 4.38 a unit instead of the existing Tk 4.17, high voltage (33kv) consumers will pay Tk 4.12 a unit instead of the existing Tk 3.92, and extra high voltage (132kv) consumers will pay Tk 3.26 a unit instead of the present Tk 3.10. For street lights, Tk 4.18 a unit will be paid instead of the existing Tk 3.98.
The commission instructed the power board to build ‘electricity maintenance and development fund’ of Tk 365 crore from the additional revenue that will be collected from power distribution agencies after the increase in the bulk rate in the first phase effective from February.
The commission last increased, in February 2008, the bulk rate of electricity by 16 per cent against a demand for an increase by 42 per cent by the power board and, in March 2010, the retail price of electricity by 6-7 per cent. With this move, both the bulk and retail rates of electricity have been increased three times in five years.
The power board has sought increase in the bulk rate as the buying and generation cost of electricity increased after expensive fuel oil-fired power plants had started supplying feeding power into the national grid.
The commission on November 3, 2010 accepted the proposal of the power board for increasing the bulk rate of electricity by 110 per cent in three years. The power board proposed to increase the bulk price of electricity in six phases to reduce the pressure of price increase.
The commission at an open meeting on January 5 took cognisance of the PDB proposal for increasing the bulk rate of electricity.
The commission’s expert committee at a public hearing on January 19 proposed that the government should give the power board Tk 1,000 crore in subsidy instead of the Tk 600 crore which it now receives — or alternatively provide an interest-free loan each year, along with a 21.09 per cent increase in the bulk rate of electricity to make the board breakeven.
