In a move aimed at reducing power tariff in the city, the state power regulator may redraw the licensed distribution areas of Mumbai, especially its suburbs, based on the quantum of power available with distributors.
VP Raja, chairman of the Maharashtra Electricity Regulatory Commission (MERC), indicated this on Monday when he met the eight bidders for supplying power to suburban Mumbai. MERC is considering applications for the next distribution licensee for the suburbs.
Reliance Infrastructure (RInfra) caters to more than 27.24 lakh suburban consumers, mostly residential. Its licence expires on August 15, 2011, and it has applied for renewal. This is the first time in India that a large utility’s licence is due to expire.
According to a bidding company representative present at Monday’s conference at the MERC headquarters at Cuffe Parade — he requested anonymity because he is not authorised to speak to the media — Raja said RInfra had a generation capacity of 500 megawatts (MW) while Tata Power Company (TPC) generated about 1,900MW. This left a gap of more than 800MW.
“Mumbai will need another 100MW of power by the end of 2011. Its present requirement is more than 3,100MW and could cross 4,000MW,” Raja said.
RInfra said in a statement that MERC has advised all bidders to apply for distribution licences under the Electricity Act recognising that several concerns, including the use of the network of existing licensees, are yet to be addressed.
“RInfra had filed a petition seeking renewal of its licence. A hearing on the petition will go on parallel to the proceedings to consider applications for new bids,” Raja told the bidders.
RInfra spends about 80% of its budget on buying power, a lot of it expensive.
This cost reflects in the monthly bills of its consumers. RInfra’s suburban tariff is the highest in the state while Tata’s is the lowest.
Industry experts say if RInfra’s distribution area is curtailed, it will have to cater to fewer consumers, who will pay less because the company may not need to buy expensive power to meet demand.
On the other hand, Tata has more power so it can cater to more consumers without burdening them.
Tata already has a distribution licence for the entire city. Brihanmumbai Electric Supply and Transport undertaking buys power from Tata and supplies to the island city.