Res­i­dents wait for one grid to power them all

DNA (Daily News & Analysis) Mumbai Edition - - FRONT PAGE - San­jay Jog san­[email protected]­


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.”

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