The Maharashtra government is examining issues relating to the implementation of uniform power rate in Mumbai. This was triggered by a report prepared by PricewaterhouseCoopers (PwC) given to the Maharashtra Electricity Regulatory Commission (MERC).
Deputy chief minister Ajit Pawar had recently announced the state was keen to introduce a uniform rate, as prevalent in Delhi. The announcement came during the recent civic body elections, where he also stated the government would take the necessary decision after looking into pertinent administrative, legal and regulatory issues.
A state government official confirmed it was in the possession of the PwC report on uniform tariff for Mumbai. “The issue is quite complicated,” he told Business Standard. “For, we will have to subsidise private power utilities such as Tata Power and Reliance Infrastructure. The government will take a call in this regard after thorough discussion in the cabinet. It can take a policy decision or issue directives under the provisions of the Electricity Act, 2003, to the MERC for the implementation of uniform power tariff in Mumbai.”
Currently, three power suppliers — BEST (BrihanMumbai Electric Supply & Transport), Tata Power Company and Reliance Infrastructure — have different rates even as they cater to a total of 4.2 million customers in the city. The state government would have to consider various options, including the Delhi model and ability to pay before taking a decision.
PwC, in its report, said the uniformity can be attained only through measures for better efficiency, besides government interventions to a certain extent. However, government interventions need to be restricted to interim support, as subsequently efficiency and cost-competitiveness of the utilities need to take over.
It says a uniform retail rate can be implemented in Mumbai in the short run only through a provision of additional resources in the form of government support to the licensees.
There has to be support from the state government either in conjunction with an inter-utility transfer or independent of it.
A system of inter-utility transfers, though, cannot alone be used to equalise rate in short run. Reason: such a mechanism would necessarily involve steep rise in rate for Tata Power Company’s distribution customers. Further, support from the state government only by for a specific region may not be a feasible option in the long run.
An MERC official told Business Standard that the commission has submitted the PwC report to the government for its “consideration and future action”.
Tata Power, with a customer base of about 200,000, declined to comment on the issue of uniform tariff for Mumbai. As for Reliance Infrastructure, it said Mumbai power tariffs could be reduced further, if made uniform. There would be two ways for implementing uniform retail tariffs; one is to implement “Ability To Pay” model and another one is New Delhi way to do it, the company said in an email reply,
Power analyst D Radhakrishna said the tariff of Tata Power, Reliance Infrastructure and BEST was “almost uniform” in nature till 2005, before variations came into existence. According to him, BEST has recently submitted a petition before MERC for the revision of tariff by almost 40 per cent.
