MERC for distribution of industrial captive power

The Maharashtra Electricity Regulatory Authority (MERC) has suggested to the Maharashtra State Electricity Distribution Company (MSEDCL) to adopt the Pune model of buying surplus power generated by industries from their captive projects instead of purchasing expensive power and putting the burden of tariff hike on consumers.

Speaking with Business Standard, Pramod Deo, chairman of MERC, said, "MSEDCL has asked for nearly 30 per cent hike across all categories of consumers in their annual revenue requirement (ARR). The hike works out to be nearly 40 per cent for high tension (HT) customers. MSEDCL is essentially asking for such a steep hike because they are buying expensive power to meet the demand and supply gap in the state. However, even after the purchase, load shedding has not subsided. A steep hike is thus likely to create a lot of public uproar. So we have asked MSEDCL to consider various options and come up with alternative proposals," he said.

Power distribution also includes the option of using captive power in urban areas and industrial clusters where MSEDCL's distribution losses are less and collection efficiency is high, Deo added.

In Pune, this option has been successfully used to minimise load shedding. Captive capacity of industries is being used for supplying power. However, since these plants use expensive fuels such diesel and naphtha power generated from these captive plants is expensive.

To meet these additional expenses, reliability charges are levied on customers who are using more than 300 units, Deo pointed out.

Similarly, cities such as Nashik, Nagpur, Aurangabad and Kolhapur as well as industrial clusters can utilise captive power sources.

To minimise costs further diesel generation sets, which use heavy furnace oil, can be used instead of diesel or naphtha. This will reduce costs substantially, and power can be produced at Rs 5.50 per unit.

He further said that MSEDCL can think of appointing franchisees for such cities who will take care of distribution and generation also through diesel generation sets when required.

The advantage of appointing the franchisee will be that he will make all out efforts to reduce distribution losses which are currently around 16 per cent in urban areas, which can be brought down to 12 per cent, Deo pointed out.