MahaVitaran bats for 10% rate rise for FY14, FY15

Electricity distribution company indicates its operations will be in jeopardy after April 1 for want of cash

Maharashtra State Electricity Distribution Company (MahaVitaran) on Thursday indicated its operations would be hit after April 1 this year if the Maharashtra Electricity Regulatory Commission (MERC) didn’t approve its proposal to revise rates for 2013-14 and 2014-15.

If MahaVitaran expects to stay afloat, it will have to announce a rate rise of least 10 per cent each for these two financial years.

The state government had approved a 20 per cent cut in rates for the September 2013-March 2014 period. In September 2013, MERC had increased the rates, allowing the distribution company to recover Rs 5,500 crore from consumers.

To compensate for the rate cut, the government will provide the company subsidy of Rs 606 crore each for the next two months. Also, MahaGenco and MahaTransco will provide Rs 100 crore to MahaVitaran. However, MahaVitaran has clarified it won’t need the subsidy if the rates aren’t revised.

For high-tension industrial consumers (express feeders), the rate was lowered to Rs 7.01 a unit from Rs 8.61 a unit; for high-tension (non express feeders), it was cut to Rs 6.33 from Rs 7.83 a unit. For residential (0-100 units), the rate was reduced to Rs 3.36 from Rs 4.16 a unit, while for those consuming 101-300 units, it fell from Rs 7.42 to Rs 6.05 a unit.

A MahaVitaran official told Business Standard the company would soon approach MERC with a fresh appeal to take up its rate revision proposals. He added the company would continue to oppose MERC’s multi-year tariff proposal and push for annual rate revisions.

The official said a revision in rates was necessary, especially as average power purchase cost was Rs 3.62 a unit, against the cost of supply of Rs 6.21 a unit. MahaVitaran collects Rs 9,506 crore annually and spends nearly a similar amount on subsidies---domestic (Rs 1,008 crore), agriculture (Rs 6,935 crore) and others (Rs 1,563 crore). “This is quite distorting, as despite subsidising agriculture consumers, MahaVitaran’s sales in this segment have fallen three per cent during 2011-12 and 2012-13...on the other hand, sales to the residential, commercial and industrial segments have surged. Therefore, a decision has been taken to meter power supply agriculture consumers,” the official said.