Maharashtra- Power bills may go up as HC approves open-access

Saturday, 07 May 2011 12:54 Pradeep B
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MERCPower consumers in Maharshtra state may have to pay 20% more than their current bills. Power suppliers across the state charge commercial users much more than residential as well as agricultural consumers. Thanks to this high amount paid by industrial units, the electricity bills of the common man remain within affordable limits. On 04-05-2011, the Bombay high court rejected Maharashtra State Electricity Distribution Company Ltd (MSEDCL)'s demand for an interim relief to stop Maharashtra Electricity Regulatory Commission (MERC) from granting open-access licence-the licence to buy power from any agency-to industrial houses without recovering cross-subsidy surcharge from them. With the HC rejecting MSEDCL's proposal, MERC will be able to continue offering open-access licences to commercial users till a further order is passed, which may take six months or more.

Following the HC order, commercial users will have the option of continuing to buy power from agencies outside Maharashtra that offer electricity at a much cheaper rate than the suppliers in the state. If the 15 lakh industrial and commercial users, which pay the state over Rs 4,660 crore more than the actual tariff, start buying cheaper power from outside, suppliers in the state will not have the option of overcharging them and use the balance to "subsidize" the bills of residential consumers.

In fact, residential consumers pay an affordable power bill as commercial users shell out cross-subsidy surcharge. Now, with the industrial units getting MERC's nod to buy cheaper power from outside, experts fear that the subsidy burden of around Rs 600 crore (Rs 60 crore-70 crore per MW) will be passed on to residential and agriculture consumers (who usually use up to 300 units per month), pushing their tariff up to unaffordable levels.

MSEDCL is not happy with the HC order. "The Electricity Act, 2003, supports open access but it also asks for recovery of surcharge equal to the level of cross-subsidy from industrial consumers opting for such a facility. However, without recovering any surcharge, MERC has approved the plea of Indo Rama and other industrial houses to grant them the nod to buy power from outside. This will have an effect on other
consumers," an MSEDCL lawyer said.

However, MERC called MSEDCL's belief baseless. "Inefficient functioning of the petitioner has resulted in higher distribution losses. It has resulted in higher purchase costs that have been passed on to consumers," an MERC lawyer said.

Source- Times of India