The Maharashtra Electricity Regulatory Commission (MERC) has increased the ceiling of fuel adjustment cost (FAC) to 20% from 10%, which means power consumers in the state will have to pay more from next month.
There are 2,30,00,000 consumers across the state who will be affected by the tariff rise.
Merc said most distribution companies want the cap to be raised to 25%, MERC officials said. It said that in case of suburban supplier Reliance Infrastructure, the migration of consumers to Tata had a contra-effect, and resulted in negative FAC because of reduction in power purchase expenses. Energy experts said RInfra’s FAC may also increase if the company bought expensive power in the future.
On the other hand, Tata consumers paid more in FAC because the company had to buy expensive power for its increased number of connections.
The commission observed that under-recovery of FAC forced distribution licensees to arrange for funds from other working capital sources to pay for the purchase costs every month. This added to the carrying cost, which in turn was passed on to the consumers, MERC said.
“Any legitimate expenditure incurred by licensees has to be allowed to be recovered from consumers under the present cost-plus regime, and any delay in doing so only adds to the eventual burden on the consumers.”
State-owned Mahavitaran, which is largely affected by under-recovery of FAC, said that it had been billing consumers for fuel cost variation every three months. BEST consumers will suffer even more because they are also paying for the losses that the civic undertaking’s transport business has incurred.