Cross-subsidy surcharge in open access to rise in Maharashtra

Industry bodies say open access will become an unviable proposition

Industries in Maharashtra will have to shell out more to avail open access due to a rise in cross-subsidy surcharge (CSS). The trigger is a recent order by the Maharashtra Electricity Regulatory Commission (MERC) to increase CSS from September 1 this year with retrospective effect.

Industry bodies argue open access will become an unviable proposition because, apart from higher CSS, they will have to pay charges towards transmission and distribution losses, wheeling charges and administrative charges. This will amount to more than Rs 3.60 per unit over and above the purchase of power through open access.

For extra high voltage (EHV) express feeder consumers, CSS in open access has increased from Rs 1.63 a unit to Rs 2.75 a unit; for EHV non-express feeder consumers, it has risen from Rs 1.20 a unit to Rs 2.26 a unit. In the case of high-tension express feeder consumers, CSS has increased to Rs 2.30 a unit from Rs 1.18 and for high-tension non-express feeder consumers, it has risen from 76 paise a unit to 1.82 a unit.

Jayant Deo, founder member of Maharashtra Electricity Regulatory Commission, told Business Standard: "'The increase in CSS is against the Electricity Act, 2003 and also the National Tariff Policy. In fact, as per the third proviso of section 42 (2) of the Electricity Act, 2003, the surcharge and cross-subsidies are required to be progressively reduced in the manner as may be specified by the regulator. However, in this case, MERC has not given the roadmap for the same. MERC’s order is against the very preamble of the Electricity Act, 2003 which demands transparency in the subsidies."

On the other hand, R B Goenka, chairman of Vidarbha Industries Association's (VIA) Energy Cell, said there won't be any competition in the power sector and the consumers drawing power from the state-run Maharashtra State Electricity Distribution Company will have no other option to purchase power from it despite high tariff. "In our view, the CSS is unrealistic and misplaced. CSS in open access cannot be increased till a road map for reduction in cross-subsidy is decided,'' he added. According to Goenka, VIA will soon approach the Appellate Tribunal for Electricity challenging the MERC's order.

According to S L Patil, advisor, Thane Belapur Industries Association, industries will not be able to avail cheap power from various sources in the country. Higher CCS, as proposed, will kill the spirit of competitiveness in the power sector and is detrimental to industrial growth, which is already struggling with the high cost of inputs, he noted.