The Bangladesh Energy Regulatory Commission (BERC) yesterday raised electricity tariffs at wholesale, transmission, and retail levels, disregarding the objections from different stakeholders.

The prices of electricity have increased at a time when people are struggling with the increased fuel and liquefied petroleum gas prices, as well as other commodity prices that went up due to the US-Israel war on Iran.

The new rate would take effect from the ongoing June billing cycle.

“We didn’t conduct any assessment of the impact on the economy while setting the new prices, but it would definitely increase the people’s expenditure,” said BERC Chairman Jalal Ahmed while announcing the new pricing.

Rather, the BERC reviewed the applications, supporting documents, and the opinions presented during the hearings before reaching its decision.

The commission considered power generation, procurement and import costs, transmission and distribution expenses, as well as government subsidies provided to the Bangladesh Power Development Board (PDB), he added.

As per the latest decision, the weighted average retail power price has been hiked by Tk 1.52 per unit or by 16.68 percent -- from Tk 9.11 per kilowatt-hour (kWh) to Tk 10.63 per kWh.

The hike did not leave out the lifeline customers, who consume up to 50 units a month. There are 1.62 crore such consumers who use a fan and a light. They face a 14.9 percent hike in tariffs.

Experts called the price hike a “hurried and exemplary” decision as it occurred within a record 30 days.

As per the BERC act, it can make a decision within 60 days of getting an application.

The PDB applied to raise the prices on May 3 and then the other utilities applied in early May. Public hearings were held on May 20-21.

During the hearing, consumer representatives opposed the move and demanded the reduction of “unrealistic expenditure” before reaching the conclusion.

This is the first time that the BERC has set power prices after 2020.

In January 2023, the ousted Awami League government amended the BERC act and took the authority of setting prices to the government themselves.

With that amendment, the government hiked the prices four times until the last hike in February 2024.

Later, the interim government brought changes to that amendment. They announced to reduce the generation costs, to cut the over-priced capacity charges, to reduce the transmission and distribution charges.

After taking office, the BNP-led government also aimed to do so.

On February 23, Iqbal Hassan Mahmood Tuku, the minister for power, energy and mineral resources, announced not to increase power prices for at least two years.

But the situation changed once the US-Israel war on Iran began on February 28.

Global energy prices have increased and Bangladesh has become highly exposed due to its overreliance on an imported energy mix in the power sector.

Responding to a question about the hurried price increase, Jalal said that there had been no pressure.

“The decision was made quickly with the national budget in mind.”

Currently, the number of electricity consumers stands at 4.98 crore in the country, and everyone is included in the hike.

Consumers using up to 200 units would receive the lower tariff for the first 75 units, but would have to pay 17.5 percent for that usage. In addition, usage between 76 and 200 units would cost 18 percent more than the existing rate.

The proposal to abolish slab benefits for residential consumers using between 76 and 200 units a month was rejected by the commission.

The highest price hike would be borne by the customers who use electricity between 300-400 units a month, a 19.95 percent increase.

Similarly, customers who need to use electricity for irrigation purposes would face a 15 percent hike.

All the sectors, including small and large industries, educational institutes, hospitals, battery charging stations, offices, and all sorts of commercial spaces would face an 18-19 percent price hike.

The commission, however, kept demand charges for all consumer categories unchanged.

Before calculating the retail prices, the BERC calculated the increased wholesale prices for all the utilities: PDB, Dhaka Power Distribution Company, Dhaka Electric Supply Company, Northern Electricity Supply PLC, West Zone Power Distribution Company, and the Bangladesh Rural Electrification Board.

Under the new order, the weighted average wholesale electricity tariff has been increased by Tk 1.39 per unit -- from Tk 7.00 per kWh to Tk 8.39 per kWh.

Despite the increase, the commission said PDB would still require around Tk 41,000 crore in annual government subsidies to cover its remaining financial deficit.

The weighted average transmission charge, commonly known as the wheeling charge, has also been raised at Tk 0.39 per kWh from the existing Tk 0.31 per kWh.

The Consumers Association of Bangladesh (CAB) yesterday expressed concern over the latest increase in electricity tariff, warning that the move could intensify inflationary pressures and raise the cost of living for people while increasing production costs across key sectors of the economy.

“When energy prices increase, economic activities are naturally affected. The impact is felt not only in households but also in industries, agriculture, transport, and other productive sectors,” said SM Nazer Hossain, vice-president of the rights body.

The tariff increase comes shortly after the new government assumed office, sending a negative signal to consumers as well as those involved in industry, trade, and commerce.

The CAB also criticised the process through which the electricity tariff was raised.

The rights body and other stakeholders had repeatedly urged the authorities to address inefficiencies, irregularities, corruption, system losses, and capacity charge-related issues before imposing additional burdens on consumers.

“Instead of taking effective measures to resolve these long-standing problems, the burden has once again been shifted onto small and marginal consumers. This is very unfortunate,” Nazer said.