An analysis of Industry’s perspective and determinants influencing elasticity of electricity demand in context of cross subsidy in India: Taking case of Rajasthan and Haryana states

This paper makes an effort to present the factors which could influence cross-subsidy elasticity of electricity demand and provides an assessment of industry perspective towards the cross-subsidy structure in electricity tariff in India. For the same, 38 no of industries from States Rajasthan and Haryana were surveyed. After analysis of collected data from the survey, paper concludes that though some industries have shifted partially to other power supply options, there are still a significant number of industries which are dissatisfied but have not moved away from utilities due to combination of factors such as cross subsidy surcharge, high capex requirement for setting up captive power plant, high cost of power generation, and hurdles in getting open access. However, these industries could be “at risk” category for the utilities as they could potential migrate if some of these factors get relaxed in the near future. Furthermore, this paper finds that there are some industries which are not even aware of other power supply options and could be in the “at risk” category. This paper suggests that as industries are high revenue consumers, utility and policymaker should consider all ill effects of cross-subsidy structure on utilities while drafting tariff policies.