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Your power bills may go up

mumbai Updated: Feb 11, 2011 01:24 IST
Dharmendra Jore
Dharmendra Jore
Hindustan Times
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Residents of eastern suburbs such as Kanjurmarg, Bhandup, and Mulund may have to pay more for their power consumption.

The reason — high-value industrial and commercial users are trying to get their power supply from suppliers other than the Maharashtra State Electricity Distribution Company (MSEDC), the power distribution arm of the state government.

This is allowed under ‘open access’, touted as one of the electricity reforms.

Open access lets high-end users directly buy power at competitive rates from any other utility in the country. It has to pay carriage fees to avail the supply by using different networks.

However, at a seminar organised by the Indian Chamber of Commerce and Industry at Yeshwantrao Chavan Centre on Wednesday, MSEDC managing director, Ajoy Mehta, told industrialists that the utility could not afford a significant drop in high-value customers as they paid more to cross-subsidise low-end consumers.

According to Mehta, the MSEDC has most number of below poverty line and susbidising industrial consumers than any other state in the country. The present annual cross-subsidy comes to about Rs4,500 crore.

He said the company had signed agreements to purchase cheaper power worth over Rs60,000 crore in the next 25 years.

Mehta said he was in favour of open access, but not at the cost of poor consumers and their service provider.

“The regulator must ensure that the present level of cross-subsidy is maintained while granting open access. The open access users must pay a significant surcharge to MSEDC.”

He suggested that taxation would be the other way to allow MSEDC to discharge its social obligation of providing below-cost electricity to various sections.

VP Raja, chairman, Maharashtra Electricity Regulatory Commission (MERC), also spoke at the seminar but evaded Mehta’s demand.

Suburban supplier Reliance Infrastructure, which is losing high-end consumers to Tata Power, has expressed similar concerns. It wants the regulator to allow cross-subsidy surcharge so that it can offer affordable rates to household users.

Sources in the power sector said the Union government was mulling over ways to sort the problems related to open access and consumers switching over to a utility of their choice.

“The options could be a cross-subsidy surcharge, a system wherein all utilities will pay a percent of their revenues to provide power to the poor, or creation of a deficit charge now used in telecom sector to fund losses incurred from operating uneconomic services,” said a senior bureaucrat.