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Uniform power tariff won’t work

india Updated: Jul 18, 2009 00:48 IST
Dharmendra Jore
Dharmendra Jore
Hindustan Times
Highlight Story

The state government has mooted the idea of a uniform power tariff across Mumbai, but consumer activists and industry experts feel it won’t end consumer woes.

Mumbaiites get electricity from different providers. While the island city is supplied by the Brihanmumbai Electricity Supply and Transport (BEST), Reliance Infrastructure supplies most of the suburbs. State-owned Mahavitaran services eastern suburbs like Mulund.

The state suggested a uniform tariff after the power regulator stalled a hike in Reliance rates.

Experts said the government should study the details before taking any populist decision ahead of the Assembly polls.

It should make a serious effort to make all utilities sign long-term purchase agreements for procuring cheaper power or encourage them to set up their own plants for the metropolis. Mumbai requires 2,300 to 2,400 megawatts (MW) every day and over 3,000 MW in the summer.

Over the last five years, demand has risen by 15 per cent per annum, forcing utilities to buy costly power from outside to bridge the gap. Reliance consumers took a bigger hit because it generates only 500MW, buying the rest from Tata Power Company and other sources.

A major producer, Tata supplies an assured 800 MW to BEST, which doesn’t need to buy too much from elsewhere when demand increases.

Energy activist Sandeep Ohri said a uniform tariff would defeat the provisions of the Electricity Act (2003), which promotes competition between utilities and offers consumers the right to select a supplier.

According to industry expert Ashok Pendse, a uniform tariff is possible only when the state offers subsidies to companies. “No company will take a hit because, in the end, it is running a business. The best solution is to tie up for coal-based cheaper power in the long term.”

Energy Minister Sunil Tatkare ruled out any subsidy. He said the government would try for a basic [minimum] uniform tariff, but didn’t explain the modalities.

Ohri said uniform tariffs work only when all suppliers are government-owned — like it is with oil companies or the railways.

Drawing an analogy with the airline industry, Ohri pointed out that the government could not mandate fixed fares when it opened up the sector. “It was market forces which brought fares down. It happened with telecom as well.”

A senior officer of a utility said tariffs could be cut if all companies shared infrastructure. “Instead of asking Maharashtra Electricity Regulatory Commission (MERC) to enforce a uniform tariff, the government should ask it to grant licences to at least four more distributors over the next six months [which would increase competition],” he said.

Rakshpal Abrol, who represents Bharatiya Udhami Avam Upbhokta Sangh, an industry and consumer forum, said that the government should subsidise bills or challenge every tariff order.

Another industry expert, who requested anonymity, said the state should check if a utility is committed to supplying to the city or is profiteering by selling power to others at higher rates.

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