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Home News Power Sector News No cap on open market purchase - Power tariff in Mumbai may skyrocket

No cap on open market purchase - Power tariff in Mumbai may skyrocket

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MumbaiMumbaikars' power tariff may soon skyrocket beyond their capacity if the state fails to put an immediate cap on the rates and quantum of electricity that suppliers are buying from the outside market. "In 2005, Reliance would supply only 1,000-1,100 MW to suburban Mumbai,'' said Ashok Pendse of Grahak Panchayat. The demand has now increased to 1,500 MW, a rise of 100 MW every year.

To meet this requirement in suburban Mumbai, Reliance is buying around 500 MW power from the open market. "Considering the increase in the demand for power, the quantum of power Reliance would need to buy from the open market will also increase,'' said Pendse. Every unit consumed costs Rs 1.17 extra as that is the loading charge for power bought from the open market.

Pendse said the rate of power in the Indian Energy Exchange (IEE), the power market, was around Rs 13.20 per unit. This hiked rate in the open market during summer, along with a rise in demand, can increase the average power bill by more than 25%, affecting the economy of citizens.

According to Pendse, BEST, too, has to buy around 100 MW from the open market of the total 900 MW it supplies to the island city.

Jayant Deo, chief executive officer (CEO) of IEX and former member of the Maharashtra Electricity Regulatory Commission (MERC), said the state's power suppliers were facing an increased demand because smaller cooperative or industrial groups in rural areas such as MIDC, SEZs, townships like Lavasa or hill stations were not empowered to generate, procure and distribute their own electricity resources.

Deo said this went against the Electricity Act of 2003, passed by Parliament, which stated that captive plants needing more than 1 MW should be encouraged to adopt their own methods of acquiring power instead of depending on the state's resources or established suppliers.

Deo said Maharashtra should follow the new act in letter and spirit. "The state should exempt cooperatives, big societies, special industrial or economic zones, NGOs and local bodies from licensing if they are interested in arranging their own power resources." Pendse said power suppliers and the state should have had a concrete deal with producers who were coming up with power plants.

Source- Times of India

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