Power subsidy turns cash, will go to bank accounts in Chennai

Power consumers in Chennai will soon get their power subsidy credited into their bank accounts just as the same procedure applies to that of cooking gas subsidies.

Tangedco has submitted a proposal to the Tamil Nadu Electricity Regulatory Commission (TNERC) for crediting power subsidy to bank accounts of benefitting consumers. After the approval from the TNERC, it would be introduced as a pilot project in Chennai. As per a senior Tangedco official, "Power subsidy must be deposited directly into the consumer's bank account as per the smart city proposal. Chennai would be the first city in the country where consumers will have this facility, if the plan is approved. Before the commencement of the project, consumers bank accounts will be linked to their repective power billing systems".

Tamil Nadu domestic power consumers get two types of Govt. subsidies. After the increase in tariffs in December 2014, Govt. of Tamil Nadu announced no tariff hike for domestic consumers up to 500 units. After the assembly elections win in 2016, chief minister J Jayalalithaa said that first 100 units consumed by domestic consumers would be free of cost. The consumers need to first pay the full amount without any subsidy. Now the TN government will credit the subsidy in the consumers' bank accounts. Tangedco was paid 8,131.56 crore as subsidy for domestic consumers, farmers and huts last year by the Tamil Nadu government. This year the power subsidy is estimated to be around 8,538.14 crore. An article is available on TNEB online Payment

For consumers, it could be bad as they have to shell out of their pocket at the first time. But Tangedco cash flow will be better, because the government provides subsidy only at the end of the financial year.

Out of the 1.92 crore domestic consumers in Tamil Nadu, at least 75 lakh to 80 lakh domestic consumer connections are in Chennai city. Nearly 60% of the Tangedco's revenue comes from domestic consumers. The plan is now only for Chennai city as a pilot project which could be extended later to other cities that have develop under smart cities.