By announcing these revised rates, MERC has successfully managed to end the war between R-Infra and TPC, as both power suppliers will now be competing on a near-equal footing, with only a marginal difference in tariff rates, especially in the higher slabs. "This increase will restrict high-end R-Infra power consumers from shifting to TPC," said an industry expert. Until now, customers-both commercial and residential-who consumed more units of power, found it economical to shift to TPC, whose rates in higher slabs were less than those of R-Infra's.
"This move by MERC will reduce the cross-subsidy burden on R-Infra's low-end consumers," said the industry expert.
To put it simply, residential R-Infra consumers requiring less power were enjoying lower tariffs, while commercial establishments were paying a higher price thereby subsidising costs for the company's low-end customers.
With the revised rates, the chances of R-Infra losing low-end consumers to TPC and retaining commercial consumers will increase.
"R-Infra has a huge low-end base, whose rates, as mentioned before, were being subsidized by high-end consumers. Now, when they shift to TPC, this cross-subsidy in R-Infra will be balanced," he added. Incidentally, last week, MERC had given its okay for a 7% hike in R-Infra's tariff, which will affect 21 lakh residential power consumers in the suburbs.
It's also worth noting that while street-lighting, hoardings and temporary connections for events for BEST consumers will drop by 11% to 17%, there is no similar relief for TPC consumers.
Source- Times of India