Mumbai consumers caught in Reliance, Tata power play

M A Choudary, an electricity contractor from the northern suburb of Malad East here, has had problems in assisting his clients who want to shift from the Reliance Infrastructure network to Tata Power.

He says Tata Power rejected many applications despite the necessary documents having been given. “The payments have been made last month. But, no action has been taken. Officials from Tata Power even call these applicants, asking them not to make the shift,” he says, showing a fat bundle of rejected applications with signed cheques. The reason, he says, is that these consumers do not bring in huge business, as they consume only 100-150 units of electricity every month.

This is one of the many grievances aired at a public hearing called by the Maharashtra Electricity Regulatory Commission (MERC). These “changeover” consumers are protesting at the problems they encounter in shifting from one electricity provider to another. In October 2009, MERC allowed Tata Power to distribute electricity across the city, which meant consumers from Reliance Infrastructure and Brihanmumbai Electric Supply & Transport Undertaking may shift to Tata Power’s network, if they wished. After it was allowed to supply power across the city, Tata Power says around 25,000 customers have changed to their network from Reliance Infrastructure.

The Electricity Act of 2003 says an appropriate commission can grant a licence to two or more persons for distribution of electricity through their own distribution system within the same area. This legislation was proposed to give more choice to the consumer to pick a distribution network.

But, this has also brought unexpected trouble to both consumers and distribution companies. Srikanth V Soman, another customer, says he had hoped to save on electricity bills in making the shift to Tata Power, as their rates were lower than that of Reliance Infrastructure. But, he is disappointed. “We have to pay wheeling charges and with this the savings are hardly anything,” he regrets. Tata Power supplies electricity to its changeover customers on networks laid by Reliance. So, these customers have to pay extra wheeling charges of 88p per unit to Reliance, as a part of their bill.

Tata Power said it had been trying to warn some of these consumers of these wheeling charges. It says its rate is not economical to consumers at the lower end, those who consume less than 100 units. “Tata Power’s tariff for this section is Rs 1.30 per unit as compared to that of Reliance Infrastructure’s at Rs 2.10. If one were to add 88p wheeling charges to it, and nine per cent of Reliance Infrastructure’s distribution losses, Tata Power’s tariff would be higher than that of Reliance. That is what we try to communicate to the consumers,” says a spokesperson of Tata Power.

Reliance Infrastructure, on the other hand, accuses Tata Power of selective acceptance of high-end consumers. The electricity regulator has a cross-subsidy arrangement with distribution entities. A distributor can command higher rates from its high-end, non-residential customers such as malls, shopping centres and cinema halls. At the same time, low-end consumers like those who consume less than 100 units a month will get a lower rate, ensuring they have access to affordable power. An uneven balance of lower end customers to higher end ones can lead to higher rates. “It has been observed that there is a predominant migration of our subsidising consumers to Tata Power. More than Rs 200 crore per annum cross-subsidy is already lost due to migration of high-end subsidising consumers,” said Reliance Infrastructure in a letter to MERC.

While these arguments would continue, the smaller consumers are caught in the web. Those who have migrated to Tata Power are paying extra in the form of wheeling charges and those still with Reliance Infrastructure might have to pay more. “Consumers are like free electrons flowing between both companies,” observed a member from a consumer organisation.