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Home News Power Sector News Mumbai - Tata Power to pay Rs 100 cr to Rel Infra as cross subsidy

Mumbai - Tata Power to pay Rs 100 cr to Rel Infra as cross subsidy

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Tata PowerReliance Infrastructure (RInfra) would get Rs 100 crore, as cross subsidy surcharge from Tata Power after the appellate tribunal upheld Maharashtra Electricity Regulatory Commissions (MERC's) order on account of consumers who moved to Tata Power Company (TPC) while still using RInfra's network to receive their electricity supply. RInfra spokesperson told Financial Chronicle that they will get around Rs 100 crore as cross subsidy reimbursement on account of migration of its high end consumers to TPC who still use the former's distribution network in some areas. Rinfra's total operating income for the half year ended September was around Rs 10,898 crore while net profit was around Rs 793 crore.

"Tata Power will deduct between Rs 0.30 to Rs 0.26 depending on the category of the consumers and would pay it back to Reliance Infrastructure," said the RInfra spokesperson. These customers also pay wheeling charges to RInfra for use of their network to receive power sourced by Tatas.

MERC in Oct 2009 allowed RInfra consumers in suburbs to take supply from Tata Power by using RInfra network. However, RInfra claims that Tata Power later started dissuading small consumers and selectively cherry picked high-end consumers. "MERC recognised that this disturbed the level playing field for healthy competitive environment and thus adversely impacted the interest of small consumers," the RInfra spokesperson said.

When contacted, Tata Power spokesperson said, "We are analysing the judgment and necessary measures would be taken in due course of time." According to industry officials the ATE order can be challenged in higher courts.

The ATE judgment said, that now after availing of the benefits of RInfra's distribution network, TPC cannot be permitted to contend that the observations of Supreme Court relating to surcharge were 'fleeting' observations and not findings."

"TPC, the distribution licensee who had been granted license in the year 1907 and who failed to lay its own distribution network cannot now claim right over the distribution network of other licensee to meet its universal service obligations," added the ATE judgment.

The spokesperson said, "We are happy that appellate commission agreed with us that Tata Power is laying network selectively and cherry picking high end consumers. The ATE order will protect the interest of 23 lakh low end subsidised consumers and will save them from huge tariff shocks."

According to RInfra, the low-end consumers would have had an impact of Rs 0.50 per unit if the MERC petition against Tata Power was rejected by the ATE.

The judgment states that the state commission is required to look after not only the interest of the consumers but also the interest of licensees. "Findings and directions given in the impugned order by the state commission which would promote healthy competition are perfectly justified," said the order.
Source- Mydigitalfc


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