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Uniform power tariff won’t work: Consumer activists

Consumer activists believe that uniform power tariff would not work in the city because of several economic and regulatory reasons.

india Updated: Dec 05, 2010 01:53 IST
Dharmendra Jore
Dharmendra Jore
Hindustan Times

Consumer activists believe that uniform power tariff would not work in the city because of several economic and regulatory reasons.

They feel that the idea will further strengthen monopolist approach of certain distributors and defy the Electricity Act 2003, which grants consumers the right to choose the company of their choice.

Energy Minister Ajit Pawar said in Nagpur on Friday that state was mulling uniform power tariff in Mumbai (around 39 lakh consumers) because more consumers (Reliance Infrastructure) paid highest rates in the state and some paid the lowest (Tata Power Company).

Pawar had announced the same last year as well but the state hasn’t come out with the proposal yet.

Raksh Pal Abrol, who represents consumers at the Maharashtra Electricity Regulatory Commission, said that Pawar surprised him.

“The issue came up only because the Supreme Court allowed Tata to distribute power in the suburbs. Tata had licence to do so before as well but the regulator allowed Tata only after the Supreme Court’s order.”

“Political leaders of the state did not like that Tata, which has distribution licence for the entire city, should meet the demand of all the consumers at uniform and effective tariff. They imposed many hurdles in their path,” Abrol said in an email on Saturday.

Following Tata’s entry in the market across the city, its competitors are feeling the pinch. Tata’s power cheaper because it has its own generation while other companies face acute shortages.

Island city distributor Brihanmumbai Electric Supply and Transport buys inexpensive power from Tata for distribution and hence its rates too are affordable. The fourth entity Maharashtra State Electricity Distribution Company caters some eastern suburbs, Thane, Navui Mumbai and rest of Maharashtra.

Another consumer representative Sandeep Ohri said that uniform tariff was not permitted or desired under the Electricity Act 2003, as it would remove the basic tenet of competitiveness.

“Nobody seems to be talking of RInfra’s total failure as a distributor to secure alternate and inexpensive long term power for its consumers. Even as late as Friday, MERC admonished RInfra for not disclosing their power procurement details plans for FY 2010-11.”

Industry sources said that RInfra has come up with a model that could work without the government paying any subsidy.

“RInfra claims that uniform tariff structure can be implemented through implementing ‘ability to pay’ model under which low cost power can be allotted to low income group (28 lakh residential consumers who use zero to 300 units per month). High cost Mumbai power and externally purchased power can go to high income group, commercial and industrial consumers.”

Consumer activists said that by doing this the state could not give preferential treatment to Mumbai consumers.

“There are 1.50 crore consumers of the state company who reside outside Mumbai. Can consumers of the same company who stay in Mumbai and outside it be treated differently?” asked Ohri.

First Published: Dec 05, 2010 01:51 IST