MERC allows RInfra to recover Rs 5,550 cr in arrears

Arrears can be recovered for next six years, accounting to total recovery of Rs 5,550 crore

The Maharashtra state regulator allowed electricity distributor Reliance Infrastructure to recover as much as Rs 925 crore per year, from its Mumbai power customers.

These arrears can be recovered for the next six years, accounting to a total recovery of Rs 5,550 crore, RInfra said, in a press release.

According to an order by Maharashtra Electricity Regulatory Commission (MERC), the arrears can be recovered with a carrying cost of 14.5% per annum.

This recovery will not have an impact on the power tariffs for its consumers, according to the company.

“Notwithstanding the above, RInfra’s tariffs are expected to reduce by 12% and 11% in the next two financial years, benefiting its valued customers significantly, mainly owing to low power procurement cost,” said RInfra, in a press release.

The revised tariff, the arrears recovery and revised CSS will become effective from 1 September, 2013,” RInfra said, in a press release.

Reliance Infra, which has 29 lakh electricity customers in suburban Mumbai, is also hoping to reverse some of the customers it lost to rival distributor, Tata Power. In the latest order, the state power regulator also allowed cross-subsidy surcharge to be paid to RInfra.

Cross subsidy surcharge was introduced by the regulator as many customers of RInfra had been moving to Tata Power. And, these customers included commercial power buyers who paid much higher tariffs than households.

Since such high-paying customers also subsidise smaller consumers, their loss increased the tariffs of Rinfra's customers. The regulator hoped to even out these odds with the subsidy.

MERC allowed RInfra to recover revised cross subsidy surcharge of Rs. 819 crore for the current 2013-14, Rs 896 crore for 2014-15 and 590 crore for 2015-16.

“RInfra’s tariffs are most competitive across all major categories, and this will ensure major inflow of high-end consumers back to us,” RInfra said.