Tribunal defers hearing on REL's plea

Reliance Energy Limited (REL) has moved the Appellate Tribunal of Electricity (ATE) against the Maharashtra Electricity Regulatory Commission's (MERC) decision to disallow the expenditure to the tune of Rs 300 crore.

The first hearing on REL's appeal was held on Tuesday. However, the Pune-based NGO, Prayas, which works as watchdog on energy-related issues, sought more time from the tribunal to study the appeal and submit its arguments. Accepting Prayas's plea, the ATE set January 18 as the next date for hearing.

While finalising the Annual Revenue Requirement (ARR) for REL in its order dated October 3, MERC disallowed the expenditure of Rs 300 crore. The REL sought expenses to the tune of Rs 414 crore for the financial year 2004-05 and 2005-06, but regulator allowed only Rs 343.

Similarly, REL sought regulator's approval for Rs 207 crore for administrative expenditure but the MERC allowed only Rs 151 crore on this head.

While REL wanted to make a provision of Rs 185 crore for income tax for the two financial years, the MERC took the view that Rs 34 crore would be enough for payment of income tax.

Rejecting the REL's claim that it would need Rs 136.78 crore for generation, transmission and distribution, MERC allowed only Rs 97.3 crore.

The REL also sought a longer period to recover Rs 350 crore losses it incurred on rebate it had given to bulk consumers in the late nineties and early part of this decade. It sought three years for residential customers and 18 months for other consumers in this regard.

It may be recalled that, MERC had in 2003 rejected the REL's plea to recover the losses it incurred because of rebate it offered to bulk consumers.

However, REL filed an appeal before ATE which overruled the order.

Following this, the regulator allowed the REL to recover Rs 350 crore from consumers within 9 months. This resulted in a hike of almost 33 per cent in the cost of power and following an uproar, REL announced suspension of the recovery of losses.

Speaking with Business Standard, Prayas' Nikit Abhyankar said, "if the tribunal accepts REL's contention with regard to the expenditure, Mumbai consumers will have to face a hike of around 40 paisa per unit. So it is necessary that consumers and consumer organisations should study the REL's appeal in detail and submit their arguments before the ATE."