MERC approves 16.48% rate hike for MahaVitaran

The state power regulator today gave nod to Maharashtra State Electricity Distribution Co (better known as MahaVitaran) to hike power tariff by 16.48 per cent. The state-run discom had demanded a 17.68 per cent hike.

The Maharashtra Electricity Regulatory Commission (MERC) has also approved the company to recover Rs 6,921 crore from consumers against MahaVitaran’s demand for Rs 7,623 crore.

The increase in tariff is primarily on account of increase in power purchase expenses. Such expenses went up in recent months due to rise in fuel prices. The revised tariff would be effective August 1. MERC has increased fixed charges of all consumers and hiked tariff by an average 10-12 per cent for water supplies and other public services.

“Today's order is a positive step, but too late. What MERC could have done two years ago has been done today. In the meantime, MahaVitaran has borne the interest burden of Rs 1,003 crore. Ultimately, the consumer will have to pay for it," said a MahaVitaran official, who did not want to be identified, told Business Standard.

However, Merc said the effective average tariff increase for consumers works out to only 6.91 per cent. This is after taking into account the impact of existing additional energy charges as well as the existing level of fuel adjustment cost (FAC). The increase ensures that all prudent expenses of MahaVitaran are recovered through the revised tariffs. The average cost of supply works out to Rs 5.56 per unit.

Merc has taken steps to contain and reduce cross-subsidy levels as per the provisions of the Electricity Act 2003 to facilitate a competitive environment for development of the power market in the state. According to the power regulator, the increase in tariffs has been uniformly applied to all categories except some select categories. Merc’s order comes at a time when MahaVitaran, with a consumer base of 19.5 million, was undergoing financial stress.