Uttarakhand was created out of Uttar Pradesh and endowed with a substantial benefit: sole access to cheap hydro power. Low-cost power allowed the state to attract industry by cutting tariffs, providing a stable financial base, and enabling a well-functioning sector. With low tariffs, the power sector has not become an arena for populist policies despite frequent electoral shifts. However, this comfortable situation also limited the pressure to use the breathing room created by low cost power coupled with high share of industrial consumption to address long-standing loss levels in other parts of the state. As the limits of low-cost power are reached, the threat to Uttarakhand’s high-level equilibrium comes from having to turn to high-cost thermal power and stagnating industrial consumption.
Estimating Marginal Abatement Costs of SPM: An Applicaiton to the Thermal Power Sector in India
