Bulk power users may have to pay to switch | mumbai | Hindustan Times
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Bulk power users may have to pay to switch

The government is planning to impose a cross subsidy surcharge on power consumers, who shift to a company that charges lesser monthly tariff than their present electricity provider.

mumbai Updated: Jul 24, 2010 00:56 IST
HT Correspondent

The government is planning to impose a cross subsidy surcharge on power consumers, who shift to a company that charges lesser monthly tariff than their present electricity provider.

Energy Minister Ajit Pawar told the Legislative Assembly on Friday that the government will use its powers to reduce disparity in tariff. The city has three electricity providers charging different rates. Tata Power is the cheapest, BEST is a little more expensive while Reliance Infrastructure charges the highest tariff.

The uniform power tariff system may not be implemented in Mumbai very soon but the state government is prepared to spare low-end consumers the suffering of competition between utilities.

Pawar said migration of high-end users [commercial users where billing is high] from RInfra to Tata was bound to put extra burden on users of low-end users of RInfra because the shift will reduce the company’s cross subsidy component significantly.

“Mumbai airport switched to Tata from RInfra and is saving more than Rs 10 lakh a month. This type of migration may impact low-end consumers of the other company because it reduces cross subsidy,” Pawar said. Power companies charge bulk users high rates and make their profits from them while providing power to domestic consumers are subsidised rates.

The minister said some companies were using their dominant position [by way of availability of more power] to offer better rates.

“We will not allow this because it increases expenses of other companies,” Pawar said.

Tata and RInfra are fighting in the Bombay High Court because the former has refused to give the latter 500 mega watts in future. RInfra has argued that in absence of Tata’s supply it will have to buy expensive power and pass the burden on to its consumers.

Several legislators alleged that Tata was denying the city its share of power and selling a significant quantum to other states.

Pawar assured the House that the government would not hesitate in recommending to the electricity regulator that it stop this practice.