APTEL upholds Tata Power's distribution licence in Mumbai

The tribunal said Tata Power has met conditions of credit worthiness and capital adequacy to supply power to the entire area

Residents of south Mumbai would now be able to choose from whom to buy power and can also expect fair prices.

Appellate Tribunal for Electricity (Aptel) dismissed the appeal of Brihanmumbai Electric Supply and Transport (BEST) — which supplies power to south Mumbai residents at present — challenging Maharashtra Electricity Regulatory Commission’s (MERC) order granting distribution licence to Tata Power till August 2039.

The Aptel passed this order on Tuesday. Tata Power will now be able to supply power to BEST areas between Colaba and Cuffe Parade on one hand and Sion and Mahim on the other.

In its judgment, the tribunal said Tata Power has met the conditions of credit worthiness and capital adequacy to supply power to the entire area. As regards the points raised to the merits, these will be considered separately in BEST’s appeal pending before it.

A Tata Power spokesperson said, “BEST had challenged the licence granted to us for distribution of power from August 16, for the next 25 years. Their appeal was dismissed by the Aptel.” No BEST official was available to comment.

An undertaking of Brihanmumbai Municipal Corporation, BEST is engaged in power supply and transport. In its appeal against the MERC order, it had argued that the licence could not have been granted by the regulatory commission as the previous performance of Tata Power was unssatisfactory.

Besides, BEST argued, MERC had erred in holding that network roll-out can be prescribed as a subsequent specific condition and has to be approved before the grant of licence.

During the public hearing conducted by the regulatory commission on Tata Power’s bid to get distribution licence, BEST had said the entry of the private player would endanger its existence and more than 47,000 of its employees could be rendered jobless.

It also claimed that in a bid to take control of the market, the private player could resort to “cherry-picking” and BEST would lose high-end industrial and commercial customers to Tata Power.

In its August 14 order, granting the licence, MERC directed Tata Power to submit a network roll-out plan in six weeks. The private player had already launched an investment plan of Rs 1,879 crore for a backbone network, spread across its entire licence area, between 2014-15 and 2018-19.  

The company is creating capacity to serve more than 1.4 million consumers by FY 19. Out of 1.4 million potential consumer network capacity, more than 8,00,000 network capacity would be around the slum-dominated areas. BEST has a consumer base of 1.05 million while Tata Power supplies power to over 5,00,000 customers in its area of operation of about 475 sqkm in Mumbai. Reliance Infrastructure is the third major distributor with a consumer base of nearly 2.9 million. The state-run Maharashtra State Electricity Distribution Company has a small presence in northeastern suburbs of Mulund and Thane.