Rise in Electricity Bills for Industries Censured

Rise in Electricity Bills for Industries Censured Rise in Electricity Bills for Industries Censured

A decision by the government to increase residential and industrial electricity prices by 10 and 20 percent (which came into force in February) is seen as an added burden on industries, ISNA reported.

According to published reports, industries and households account for 34 and 32 percent of total electricity consumption, being the two major sectors with the highest power consumption.  

The energy ministry says it is compelled to raise prices to compensate huge and rising deficits emanating from the cost of producing power and the subsidized prices consumers pay. However, experts quoted by ISNA say that the government could instead have raised prices for the high-consumption households across the country to fill the gaps.  

Currently, the finished price of electricity per kilowatt-hour at power plants is 6,000 rials ($1.7). However, the price households pay at he most is barely 2,930 rials ($0.83), which is almost half the production cost, another indication that households are still hugely subsidized.

Moreover, electricity prices are set in a sort of weird manner so that residential consumers with higher usage enjoy bigger subsidies. "High consuming subscribers enjoy close to 3 million rials ($85) in subsidies a month," the report quoted unidentified observers as saying.

Experts argue that in industrial countries like Germany, industrial electricity prices are kept lower than residential prices because "households do not significantly contribute to GDP growth" compared with industries.

However, in Iran, the recent decision to increase power prices has brought the two rates "closer together," the report said.

In a situation where the country is crawling out of recession, doubling the rates for industrial electricity is not in the national interest, Valiollah Seif,  the Central Bank of Iran chief was quoted by ISNA as saying.  

"Higher industrial electricity rates will naturally lead to increase in finished costs of goods and impact the society as a whole," the top banker claimed.

Had the government taken measures to increase the rates for households with high electricity consumption, instead of increasing the bills it sends to the industries, subsidies paid to high-consumption households would be reversed, the report said.