MSEDCL buys power from various generation companies and which is transmitted through a high voltage network before reaching its substation. From MSEDCL substation's power reaches homes, shops and small industries through MSEDCL network.
MERC wants MSEDCL to calculate the expense for creating and maintaining the distribution network - wire business and purchase of electricity - retail business. The revenue from wire business will be a certain percentage of value of the distribution network. Rest of the revenue will be deemed from sale of electricity.
In many western countries, there are many companies that supply power using the common network. MSEDCL fears that if it follows MERC's directive Tata and Reliance will seek a parallel license to distribute electricity in Thane and Navi Mumbai, which gives huge revenue to the company.
RB Goenka of Vidarbha Industries Association (VIA), however, supported MERC's directive. "If industries are to get power through open access they will have to pay some charges if they use MSEDCL's network. How will this wheeling (transmission) charge be determined unless wire business is separated from retail business. With central government deeming consumers having 1 MW plus load as open access consumers, this exercise has to be done."
An MSEDCL official said that while renewing Reliance' license in Mumbai, MERC had taken the stand that wire and retail business could not be separated. "Supreme Court had given a similar judgment in 2008 while adjudicating between Tata and Reliance."
He further said that as per Electricity Act a distribution licensee meant a utility that was engaged in wire business as well as retail business. "It implies that the two activities can not be separated."
MSEDCL is fighting a battle for its survival as its losses continue to increase. Central government's decision to allow industries to buy power from private players without taking permission from distribution companies can deal a severe blow to its revenue. If private players start supplying power in Thane, Navi Mumbai, Pune, etc the state-run company will simply go bankrupt. It is therefore opposing all efforts to reform the power sector.
Source- Times of India