Reliance Energy cuts billing rate 3%

Reliance Energy, formerly BSES, has decided to slash the billing rate for customers by 3 per cent from February.

Customers for the February 20 to March 15 billing cycle, that is those who bought power during this period, will pay Rs 4 per unit against Rs 4.12 per unit in the previous cycle.

The Rs 4 per unit is the weighted average cost that has been arrived at for residential, commercial and industrial customers. In reality, the per unit cost paid by each category of customers will vary as commercial and industrial customers pay a higher cost per unit to cross subsidise residential consumers.

Billing rate is the actual cost paid by the customer while tariff refers only to the energy charge. Apart from the tariff, the customer also pays various other charges such as demand charge, maximum demand charge and fuel adjustment charge.

"The reduction in billing rate has been primarily brought about by a combination of three factors""the lowering of customs duty on coal, increased productivity in the company and buying more power from Reliance Energy's coal-based plant at Dahanu and reducing dependence on the costlier power from the Tata Power Company," sources familiar with the development said.

In fact, the average billing rate has come down by an average of 12 per cent between April 2003 and February 2004, that is, from Rs 4.56 per unit to Rs 4 per unit.

The average household that consumes 200 units per month was paying Rs 634 before April 2003. Now, with the drop, it will pay Rs 569. Commercial units, which consume about 1000 units will find their bills going down from Rs 7160 before April 2003 to Rs 6500 now, a reduction of 10 per cent.

High-tension users, which consume more than 1000 kw, will find their power bills go down from Rs 4 per unit to Rs 3.4 per unit a reduction of a little over 14 per cent. The reduction in billing rates has been achieved in about a year after the Reliance group gained control of BSES.

The reduction in billing rates must be seen in the context of the passage of the Electricity Act 2003 which will enable customers within the next five years to buy from power producers of their choice when open access is allowed in distribution.

Price is seen to be the determining factor in purchase of power and companies are trying to build positions by offering a price advantage. Tata Power, for instance, has announced plans (subject to regulatory approvals) for differential tariff.

Called, time-of-day tariff in industry parlance, Tata Power plans to sell power at a unit cost that is less by 75 paise a unit for customers buying power between 10 pm and 6 am as against those who buy between 6 am and 10 pm.