Uniform power rate a dream
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Uniform power rate a dream

Why can’t there be a single power tariff across the city? Experts say standardisation of rates would force the state to cover power firms’ huge losses. This subsidy, ultimately, would be paid by the taxpayers.

mumbai Updated: Sep 17, 2010 02:31 IST
Dharmendra Jore
Dharmendra Jore
Hindustan Times

A uniform power tariff across Mumbai remains elusive. It’s a complex issue, one that the state government now avoids discussing because of the number of stakeholders — four distribution companies, of which one also supplies power to two others; an industry regulator and lakhs of consumers — and the complexity of the issue.

Ironically, it was the government itself that mooted the idea last summer after it stalled Reliance Infrastructure’s seven per cent tariff hike.

As the stay was vacated on Monday, the Opposition trained its guns on the government. The Opposition wants the state to intervene and spare smaller consumers any financial burden. They want New Delhi’s uniform tariff model to be implemented.

Maharashtra Electricity Regulatory Commission (MERC) officials told Hindustan Times that the New Delhi model can’t work in Mumbai because of various legal and technical reasons.

Energy expert Ashok Pendse said a uniform tariff would inevitably mean losses for some power firms and is possible only when the government subsidises those firms. However, he pointed out, “the government can’t pay a subsidy exclusively for Mumbai when the rest of the state is denied uninterrupted supply”. He added: “No power company will bear losses because, at the end of the day, it is a business. The best solution is to tie up for coal-based cheaper power in the long term.”

The state government has already ruled out any subsidy.

Four companies supply power to Mumbai. While the island city has Brihanmumbai Electricity Supply and Transport (BEST), Reliance Infra supplies most of the suburbs. State-owned Mahavitaran supplies some eastern suburbs, Thane and Navi Mumbai. Tata Power Company supplies BEST and Reliance Infra and has recently entered the retail business.

Pendse said the government should ensure utilities get inexpensive power. “Reliance Infra has to meet its shortfall of more than 700 megawatts (MW) by buying it from expensive sources. Naturally, the costs are passed on to its customers,” he said.

Mumbai’s peak-hour demand is 3,300 MW, while it’s 2,700 MW for the rest of the day. Tata gives most of its 2,000 MW supply to its own distribution arm, BEST and Reliance Infra. Mahavitaran has its own sources.

Energy Minister Ajit Pawar and Energy Secretary Subrat Ratho were unavailable for comment.

In New Delhi, a uniform tariff worked because the state controlled power supply to the three private distribution companies. Power is sold at a uniform rate to these companies and the state gave a hefty subsidy till last year. Now, the Delhi government offers a subsidy of Re 1 per unit to small consumers.

The Delhi model too has run into trouble because utilities have asked for a tariff hike and a higher state grant.

Energy activist Sandeep Ohri said a uniform tariff would negate the Electricity Act (2003), which promotes competition and gives consumers the right to select a supplier.

He said if the government decided, for example, a uniform tariff of Rs 4.46 per unit, Reliance Infra would lose Rs 2.65 per unit and BEST Rs 1.88. These firms would not accept the tariff unless their losses were subsidised.

“The government will be forced to grant a subsidy [which will be ultimately borne by taxpayers]. Power firms will make profits and consumer will continue to pay,” Ohri said.

First Published: Sep 17, 2010 02:30 IST