Residents wait for one grid to power them all
The rage over inflated bills that Adani Electricity consumers have received has triggered a debate on the need for a uniform power tariff in Greater Mumbai. The city, unlike others, does not have a single distribution licensee, like a state electricity board
Currently, there are three major privately owned power distribution companies (discoms) including Tata Power, Adani Electricity (which took over Reliance Infrastructure’s Mumbai distribution business from August 29), and the Brihanmumbai Electric Supply and Transport (BEST). Together these three supply to nearly 45 lakh consumers in the city. Then there is the state-run Maharashtra State Electricity Distribution Company (Mahavitaran), which supplies to suburban Mulund and Bhandup.
Currently, the per unit tariff charged for consumption of 0-100 units by these distribution companies ranges between Rs 2.91 and Rs 4.50, for 101-300 units between Rs 5.16 and Rs 8, for 301-500 units between Rs 7.96 and Rs 11.48, and for 500 units and above between Rs 9.45 and Rs 14.10.
Stakeholders have raised concerns over different electricity tariffs and suggested that retail tariffs should be uniform across Mumbai, irrespective of which licensee supplies the electricity.
PWC, in its report on uniform retail tariff released in 2011, had said the tariff rates are calculated on the basis of aggregate revenue requirement (ARR), and around 80 per cent of ARR is made up of power purchase cost.
Power for distribution licensees in the city is sourced from Tata Power’s generation plants in Mumbai, Reliance Infrastructure’s Dahanu plant, and external sources. Mahavitaran draws power from Maharashtra Power Generation Company and others. The difference in tariffs is attributable to varying costs of supply, which is contributed mainly by the power purchase cost incurred by licensees.
A former chairman of the Maharashtra Electricity Regulatory Commission (MERC), VP Raja, says that uniform tariff for Mumbai isn’t possible, but can be considered as a compromise formula for lower-end customers — those consuming 0-100 units a month.
“‘But the focus of the Electricity Act, 2003, is to promote competition and improve productivity. If uniform tariff is applied, it will kill the competition,” he said.
Power analyst D Radhakrishan says uniform tariff for domestic consumers should be introduced, while bulk consumers can pay rates commensurate to the demand and supply trajectory.
A former MERC member, Jayant Deo, argued that the concept of uniform tariff “structure” and not “rates” is permitted under the Electricity Act, which demands safeguarding consumer interest while recovering electricity cost reasonably. This would also encourage competition.
“In view of multiple licensees and a substantial domestic consumer base, demand for uniform rates will not sustain. This will deny competition benefits to several consumers as efficiency gains will be utilised to support cross-subsidies required for uniform rates,” Deo said.
Successive governments have attempted to bring a uniform rate, but refused to bear the necessary expenses citing financial constraints. The erstwhile Congress-ncp government said it could not take a hit of Rs 2,000-2,500 crore annually, as discoms are from the private sector.
The incumbent BJP government has repeatedly said uniform tariff may be considered for 0-100 and 101-300 units categories, but there has been no decision so far due to lack of agreement among the stakeholders.
Lost in transmission Mumbai currently enjoys a unique status for 24x7 power supply even during Aprilmay and October heat. The normal power supply in the entire city ranges between 2500 MW to 3,400 MW but the demand rises to 3,600 MW in summer. But the demand in is set to soar to 5,000 MW in the near future, on account of spurt in infrastructure projects including Monorail, Metro rail, sea links and coastal roads.
However, transmission constraints may impact power transfer to meet burgeoning demand. Both Tata and Adani have undertaken transmission strengthening but several hurdles including ‘right of way’ and clearances from a host of agencies remain. And except Tata Power, none of the other three entities has its generation project situated in the city.
IDAM Infra managing director Balawant Joshi says that the current scenario has been caused by many reasons including stranded assets, duplicate wire network and complicated evolution of competitive frameworks. “Multiple distribution licensees creating their own distribution network is a waste of national wealth. MERC should take the initiative to create one Mumbai grid to avoid capex in future. It is feasible to implement such a structure with proactive regulatory initiative,” Joshi says.
MERC former chairman VP Raja says: “There is a need for laying high voltage, direct current transmission lines for transfer of power from outside.”
Activist Ashok Pendse said: “The hurdle is strengthening transmission capacity. Voltage level of transfer points at Vikhroli and Borivali has to go up. Higher voltage such as 132 kv would mean higher transfer capacity. If this is achieved, then competitively bid cheaper power can be brought from outside for Mumbai.”