Don’t worry, power tariff hikes will not shock you, Maharashtra tells consumers

The Maharashtra government will ensure, by invoking its power to interfere if need be, that the tariff hike for consumers of Reliance Energy and other power distribution companies is kept to a minimum, power minister Chandrashekhar Bawankule told the state assembly on Friday.

The Maharashtra government will ensure, by invoking its power to interfere if need be, that the tariff hike for consumers of Reliance Energy and other power distribution companies is kept to a minimum, power minister Chandrashekhar Bawankule told the state assembly on Friday.

Power distribution companies such as Reliance Power, Tata Power, BEST and MSEDCL have submitted their tariff hike proposals to the Maharashtra Electricity Regulatory Commission (MERC). While the MERC is holding hearings on the petitions, city MLAs on Thursday raised concerns over the proposals in the Assembly and sought government intervention. The MLAs said although all companies have proposed a hike, the proposal by Reliance was the highest.

Replying to the debate on Friday, the minister said the proposed hike was unreasonable. “The burden of the hike, if admitted by the MERC, on Reliance consumers will be around Rs 1,500 crore. We are waiting for the MERC ruling, after which we will intervene under rule 65 of the Maharashtra Electricity Act 2003 to reduce the hike,” he said.

Reliance Energy, a power distribution arm of the Reliance Infrastructure Ltd, supplies electricity to 20 lakh domestic consumers in the suburbs of Mumbai and Thane. Reliance Energy has attributed the power tariff hike to the wheeling charges that have been pending for years, as the recovery has been deferred on the directives of the MERC. Later in the day, Bawankule said the government may ask Reliance to recover the wheeling charge dues over the next five or ten years, instead of a year.

“We have submitted the petition to the regulator, which has the right to decide on the proposal. The proposed hike is high as the wheeling charges need to be recovered in a year. The delay in recovery may cause spiralling of the dues further by over Rs1,200 crore. We will abide by the MERC’s ruling,” said an official from Reliance Energy.

The minister said the consumers of the MSEDCL will not have to pay more. “The hike proposed by the MSEDCL is comparatively low. We will reduce the distribution losses to avoid the hike,” he said.

Bawankule said the enormous debt on the three companies and distribution losses have prompted the hikes. “The MSEDCL, Mahagenco and Mahadiscom have a collective debt of Rs 55,058 crore. The amount has been taken at higher interest rates, ranging between 10.20% and 11.30%. We are planning to transfer the debt to government-controlled financial institutions where the rates are low,” he said.

The state is also mulling a policy for power generation from unconventional sources of energy generation such as solar, wind among others.

Dilip Walse-Patil, former power minister and member of NCP, demanded financial restructuring of government companies to reduce the debt burden.