While the government and state electricity regulator are mulling uniform power tariff for the city's 40 lakh consumers, experts are wondering how the system would evolve and work effectively.
On Tuesday, Tata Power Company’s executive director, operations, S Padmanabhan, also raised doubts over the viability of enforcing a uniform power structure in Mumbai because of financial and regulatory reasons.
During the recent state budget session, energy minister Ajit Pawar had told the legislature that the Maharashtra Electricity Regulatory Commission (MERC) was working on implementing uniform tariff for the city.
Sources said the MERC’s consultant had suggested that a subsidy of more than Rs1,000 crore [to the power utilities] would make uniform tariff possible. Achieving parity would hike Tata Power's tariff.
But Padmanabhan had a different take on subsidy.
“Why would the state government pay subsidy [to help determine uniform tariff] to any private utility when the Electricity Act, 2003, does not encourage such a practice? There are four companies, including a state-owned one, with different consumer bases,” Padmanabhan told the Hindustan Times.
Several consumer activists have raised similar concerns.
They feel the subsidy would deny people benefits of competition and the government, in some way or the other, would recover subsidy by increasing taxes.
The demand for uniform tariff has been on since Tata Power made an entry in the city’s domestic market in 2009.
It provides electricity at rates 30% to 40% less than its competitors, who are feeling the pinch because in the last one year, more than one lakh consumers have switched to Tata Power.
The rate of migration is higher in the suburbs, where Reliance Infrastructure supplies power at the highest rates.
Tata Power’s GROWing consumer base
Tata Power has increased its consumer base to 1.60 lakh, of which 90% are residential connections. New network is being laid in suburbs and the island city.
“We will be able to add another one lakh consumers by March 2012 because we get more than 8,000 new applications every working day. In next five years, we plan to achieve the biggest consumer base,” said Padmanabhan.
“Supplying inexpensive power will not be problem because we will have enough power at our disposal. We already have 400 mega watts extra than corresponding period of the last year.”
Padmanabhan also praised the regulator’s initiative of multi-year tariff system in which tariff would be determined for five years and it could be corrected once in six months.
“The companies may face challenges in the new system but the consumer will know the tariff in advance,” he said.