MERC pulls up Tata Power over proposed tariff

MERC criticizes Tata Power for favoring high-end consumers in tariff hike to recover arrears, questions rate changes without approval.

Mumbai: The Maharashtra Electricity Regulatory Commission (MERC), during an online hearing on Tuesday, sharply criticised Tata Power for going soft on high-end consumers while charging high rates for customers with low consumption in their bid to recover ₹927 crore arrears through electricity bills. The commission also pulled up Tata Power for publishing on January 29 a corrigendum to the revised tariff proposed in December 2023 without its approval.

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As per the notice issued by Tata Power on January 29, the company has proposed a 5% reduction in charges per unit compared to existing rates in cases where consumption is 500 units per month or above. The tariff for customers whose consumption is less than 300 units has been hiked 66-205%. If cleared, the proposed hike would apply to nearly 7.15 lakh customers – around 90% of Tata Power’s 7.63 lakh customer base – whose consumption falls within the 0-300 units tariff slab. The BEST undertaking and Adani Electricity have 10.50 lakh and 27 lakh customers in the city, respectively.

The rate proposed by Tata Power on January 29 were marginally higher than the tariffs proposed at the end of last year, which were shared with the MERC. The commission had sought suggestions/ objections to the proposed rates from citizens and scheduled a public hearing on February 27 before arriving at a final decision in the matter.

Tata Power officials present at the hearing said the company was trying to recover ₹927 crore arrears by dividing the burden equally across its 7.63 lakh consumer base, as they feared that high volume consumers would cross-subsidise consumers whose uptake was less than 300 units.

“The cross-subsidy for consumers with consumption above 300 units ranges 141-156%. As envisaged in the tariff policy, it should be about 120% and such reduction needs to be compensated from the tariffs of those consuming 0-100 units and 101-300 units,” said a company representative who was present at the hearing.

The MERC also expressed unhappiness about Tata Power publishing a corrigendum to tariffs proposed in December on January 29, hiking rates further. “You published a revised tariff chart as corrigendum without the approval of the Commission. Why was no approval taken?” The commission asked. Tata Power representatives simply tendered an apology in response.

Tata Power’s previous tariff hike, approved in April 2023, was challenged before the Appellate Tribunal for Electricity (APTEL), which ruled in the company’s favour in January 2024, paving the way for the latest revision of tariffs.

Tata Power refused to comment on the issue.