Tata Power's distribution arm, with a consumer base of 3.30 lakh in Mumbai, has approached the Maharashtra Electricity Regulatory Commission ( MERC) to revise tariff rates for the next three years. Tata Power has asked MERC to increase its present average tariff of Rs 5.97 per unit to Rs 6.75 per unit for 2013-14, Rs 7.39 per unit for 2014-15 and Rs 8.05 per unit for 2015-16 at a rate of 10.46% annually (CAGR).
"The proposed hike in tariffs — which is subject to MERC review and approval - has been necessitated by a significant rise in fuel prices, the impact of cost incurred on developing Tata Power's own last mile Low Tension (LT) network in Mumbai clubbed with continued incurrence of wheeling charges imposed on account of using a third party network and unrecovered costs over the past three years as the company has not revised its tariffs for the last 3 years. The residential customers at the lower end of the spectrum are least affected as is evident from the mere Rs 1.22 hike proposed," a Tata Power spokesman said.
The rise in the cost of coal has been 82 per cent while it is 41 per cent in gas, 152 per cent in RLNG and 83 per cent in oil during FY11 and FY14.
In its petition, Tata Power said that had the fuel prices remained at the same level, the tariff required to meet the annual revenue requirement would have been in the range of Rs 6.12 per unit to Rs 6.43 per unit. However, a high rise in fuel price has contributed to tariff increase by about Rs 1.62 per unit.
Tata Power (distribution) recalled that it had sought an average tariff of Rs 6.11 for 2009-10 though MERC allowed an average tariff of Rs 4.41 per unit. Similarly, against its plea for an average tariff of Rs 5.86 per unit for 2010-11, MERC had approved Rs 5.20 per unit. Therefore, the company argued, such tariff differentials result in under recovery of annual revenue requirement and consequently it results in an unrecovered amount which is due for recovery at a later stage but with an interest cost.
"In our humble submission, such deferred recovery is neither in the interest of the consumer nor in the interest of the utility," the company said.
Tata Power said its changeover LT customers continue to be burdened by wheeling charges on account of being dependent on a RInfra network. The present wheeling charges determined by MERC are 38 paise per unit for low tension (LT) consumers and 19 paise per unit for high tension (HT) consumers. Wheeling charges by the third party network operator has been proposed to be increased from 88 paise to Rs 1.46 in the Business Plan for FY14.
This is charged on customers who have exercised their right to move over to a competitive service provider. Building the network and paying for charges to R-infra is certainly leading to higher cost for low end customers at this stage. This however, has not deterred customers continuing to switch to Tata Power, despite these additional charges.
Apart from Tata Power, other distribution utilities in Greater Mumbai include Reliance Infrastructure (R-Infra), BrihanMumbai Electric Supply and Transport (BEST) and MahaVitaran. BEST, R-Infra and MahaViataran are soon expected to approach MERC for tariff revision. RInfra's average tariff is Rs 6.70 per unit while it is Rs 8 per unit for BEST and Rs 6.50 per unit for MahaVitaran.
Source- Business Standard