Utility bills are expected to make slight jump this year as Finance Minister P Chidambaram proposed imposing of customs duty on steam coal and hiked countervailing duty (CVD) on bituminous kinds of coal.

In the Budget 2013-14, Mr. Chidambaram not only brought steam coal into the purview of customs duty, but also equalized duties on steam coal as well as bituminous types of coal to impose 2 per cent customs duty and 2 per cent CVD.

Therefore, the finance minister levied additional customs duty of 2 per cent plus hiked CVD by 1 per cent. Analysts say that the changes will lead to hike in utility bills in the months to come.

Commenting on the changes, Deloitte Touche Tomatsu's Debashish Mishra said, "Although CVD can be claimed back, the 2% levy in customs duty will affect coal prices and power generation costs."

It may be noted here that CVD on the thermal coal, which is used to generate electricity, can be claimed back by the importer companies.

The cost of electricity generation is estimated to jump by at least 5-6 paise per unit, and the terms of power purchase agreements between power producers and distributors allow the any increase in costs to be passed on to the consumer.

Analysts say that Mr. Chidambaram offered little to thermal coal & power sector, except amalgamating domestic and imported coal and marketing them through a collective pricing mechanism.