New power tariffs offer more choice

The reduction in Tata Power Company’s tariff for domestic consumers, who use less than 300 units of electricity a month, may lead to an erosion of Reliance Infrastructure’s consumer base, say consumer activists.

The reduction in Tata Power Company’s tariff for domestic consumers, who use less than 300 units of electricity a month, may lead to an erosion of Reliance Infrastructure’s consumer base, say consumer activists.

HT Image

Activists feel more Reliance Infrastructure’s (RInfra) 23 lakh suburban consumers may switch to Tata Power Company (TPC) and Brihanmumbai Electric Supply and Transport (BEST). “Today’s tariff order is very sensible,” Mumbai Grahak Panchayat chairman Shishir Deshpande told Hindustan Times. “Earlier, low-end residential consumers didn’t get any incentive to migrate to TPC. Now, it makes more financial sense to do so.”

On Tuesday, the Maharashtra Electricity Regulatory Commission (MERC) approved a reduction in TPC’s tariff for consumer using less than 300 units a month and ordered BEST to reduce its rates too.

On Monday, MERC had allowed RInfra to implement the tariff hike it had approved for 2009-10. RInfra will submit its demand for higher rates for 2010-11 to MERC for approval next month. RInfra consumers can expect further hikes.

The new rates are likely to encourage BEST and Reliance Infrastructure’s low-end consumers to switch to TPC, which will continue to supply at the cheapest rates. The rate of migration from RInfra to TPC had reduced in recent times, sources in the power industry said.

TPC has more than 85,000 consumers, most of who have switched from Reliance in the past one year. TPC’s executive director S Padmanabhan told Hindustan Times: “The new order offers Mumbai’s consumers more choice. We expect people who use 300 units or less to come to us.”

RInfra had objected to TPC’s act of choosing bulk users such as airports, hospitals and commercial complexes arguing that if bulk consumers shifted to TPC, it would impact the monthly bills of low-end consumers because cross-subsidy from high-end consumers kept the low-end tariff down.

Deshpande said RInfra should now have no complaints against TPC. “TPC’s high-end users will pay more so I expect the balancing act in TPC as well.”

BEST consumers will have to wait to switch because the undertaking has objected to TPC using BEST infrastructure for supply. “MERC has told TPC to create its own infrastructure in the island city to facilitate migration,” MERC secretary KN Khawrey said.

Shiv Sena executive president Uddhav Thackeray has threatened to protest if the state does not stop the power tariff hike.