Power rate cut: Wait for Mumbaikars gets longer

Maharashtra Cabinet undecided over providing subsidy to private utilities

Three weeks after Congress member of Parliament (MP) Sanjay Nirupam called off his fast, the Congress-led government in Maharashtra is yet to decide on a power rate cut for consumers of Reliance Infrastructure (distribution) and Tata Power (distribution) in Mumbai.

The delay in taking a decision is due to the strong objection by the state finance department to shell out funds to provide a subsidy to private power distributors. Besides, the distribution companies have indicated that rate-related issues will be settled at the level of Maharashtra Electricity Regulatory Commission (MERC) under the Electricity Act, 2003, and they won’t be in a position to unilaterally take any call in this regard.

Tata Power’s consumer base is 450,000. For Reliance Infrastructure, it is 2.8 million.

The Maharashtra cabinet, which met on Tuesday, did not take up the rate cut issue.



The cabinet had, on January 20, already approved a 20 per cent cut across the 21.5-million consumers of Maharashtra State Electricity Distribution Company (MahaVitaran). The cabinet also took a decision to provide Rs 1,212 crore towards subsidy to MahaVitaran for two months.

A senior minister elected to the Maharashtra Legislative Assembly from the western suburbs admitted pressure was mounting for an early decision on power rate cut before the announcement of the code of conduct for the ensuing Lok Sabha polls.

“Therefore, it has been decided that a group of ministers and elected representatives will soon hold talks with the Tata Power and Reliance Infrastructure to discuss various options for tariff cut for their consumers in Mumbai. After the proposed meeting, the cabinet is expected to take a decision,” said the minister.

According to MERC’s orders issued last year on multi-year rates, Tata Power’s rate for 2013-14 was revised upward, but was much lower at Rs 2.13 a unit compared to Rs 3.93 a unit by Reliance Infrastructure for low-end consumers with monthly consumption up to 100 units.

For consumption between 101 and 300 units, Tata Power’s rate is Rs 3.62 a unit against Reliance Infrastructure’s Rs 6.84 a unit.

Congress MP Gurudas Kamat has reiterated that Reliance Infrastructure consumers be allowed to shift to Tata Power  considering lower rates especially for the monthly consumption up to 300 units.



Incidentally, MERC in its another order, issued in October 2013, had ruled Reliance Infrastructure distribution’s 792,000 consumers with monthly consumption up to 300 units should be immediately transferred to Tata Power distribution.

However, the order was challenged by Reliance Infrastructure distribution in the Appellate Tribunal for Electricity, which has stayed the MERC order.