A RInfra spokesperson said Merc was yet to work out the recovery formula that would determine the tariff hike. "We will recover about Rs400 crore of cross-subsidy surcharge from the people who switched to Tata Power (starting November 2009) but are still being served through RInfra's distribution network." Of the 1.3 lakh to 1.5 lakh that migrated, most fall in the high-end category.
Reliance Infra, however, would collect the Rs1,360 crore and Rs556 crore it has incurred as operational expenses from all its customers.
Residents who consume over 300 units of power a month were considered high-end users. Reliance Infra has 27 lakh customers, about 5.5 lakh of who are in the top-end category. It charges these Rs9-10 per unit and uses it to cross-subsidise those in the lower-end segment, whom it charges Rs3-6. Tata Power, which largely caters to industrial and commercial establishments, charges high-end residential users about Rs4 less than Reliance Infra.
Tata Power declined comment on the development while Merc was unavailable for comment. Tata Power can supply power in the entire Mumbai license area. At a public hearing on Tuesday, Merc reportedly extended RInfra's distribution license to the whole of suburban Mumbai for another 25 years while rejecting the applications of four others. This comes as a huge blow to landlords who had rented out apartments in the period since 2004 as it would be difficult for them to recover the money from old tenants who may have long left.
Source - Daily Bhasker