Cancel REL's suburban power licence: BEST

Offers to supply power in Mumbai suburbs.

The Brihanmumbai Electric Supply and Transport Undertaking (BEST) today demanded that the Maharashtra Electricity Regulatory Commission (MERC) revoke the licence of Reliance Energy (REL) and give BEST the right to supply power to Mumbai suburbs. At present, REL caters to the suburban areas and BEST a major part of the city.

Addressing a press conference here, BEST general manager Uttam Khobragade said since REL has failed to comply with power regulator MERC's directive to enter an agreement with Tata Power Company (TPC), its licence should be cancelled.

In fact, MERC had asked both BEST and REL to sign power purchase agreements (PPAs) with TPC. Although BEST has already signed such an agreement with the power generating company, REL is yet to comply.

"Despite repeated reminders from MERC since 2005, REL has found some excuse or the other to avoid doing so. While giving approval to our PPA in November last year, MERC even warned REL of action if they didn't comply. Five months have passed... Now, it is time for MERC to take stern action against REL," Khobragade said.

TPC has generation capacity of 1,700 mw. Till last year, the company used to give 647 mw to BEST and 762 mw to REL, keeping the rest with itself for direct supply to bulk customers like the railways, the Brihanmumbai Municipal Corporation (BMC) and other key installations in the city.

However, after MERC approval to its PPA with TPC, BEST is now entitled to 800 mw. This increase in BEST share has resulted in REL losing 153 mw.

REL has challenged this decision of the state power regulator before the Appellate Tribunal for Electricity (ATE), and hearing on the petition has been scheduled for April 4.

MERC had, on April 1, rejected an REL application, in which the company had requested the regulator to allow it to continue with last year's allocation since the tariff order for 2008-09 was yet to be finalised.

If REL has to bridge this gap of 153 mw and make arrangements for the summer demand for an additional 150 mw, then the company will have to shell out some Rs 500 crore, which will be subsequently passed on to the consumers, said sources from the industry.

"MERC's April 1 order has once again upheld our PPA and no court or tribunal can pass an order against it as it will violate the basic principle of the law that 'no contract can be challenged in the court of law unless it is against the law or public good'," Khobragade claimed.

"If BEST, which is a public sector unit, has gone ahead and signed a PPA to protect the interest of its consumers, why can't REL do the same? If it can't protect the interest of its consumers, then we are ready to serve them in suburban Mumbai," he said.

When contacted, the REL spokesperson refused to comment on the demand made by BEST, saying, "We would not like to comment on a matter which is sub judice".