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Tata Power opposes RInfra's multi-year tariff proposal

Last Updated: Friday, April 5, 2013 - 23:35

Mumbai: Tata Power Friday objected to Reliance Infra's multi-year tariff proposal submitted to the regulator MERC, saying it has many hidden charges.

RInfra termed the charge as misleading.

Tata Power said in a statement: "The submission by RInfra lacks transparency as it appears that there is no tariff increase, whereas significant increase through wheeling and cross subsidy charges are being pushed in to increase the tariff through back door tactics.

"The proposed tariff by RInfra is anti-consumer and anti-competition as it interferes with the customer's right to switch over to a competitive tariff provider."

The company also said it has conveyed its observations to MERC (Maharashtra Electricity Regulatory Commission) on RInfra's multi-year tariff plan submitted to the regulator.

The MERC will begin hearing on both the petitions from tomorrow.

In a counter statement, RInfra termed the Tata Power argument as "misleading" and said, the public hearing process of its petition was approved by MERC and the hearing already underway.

"Tata Power's objections to tariff hike are misleading and against the interest of smaller consumers of the city," RInfra said.

According to the tariff proposals submitted to the MERC, Tata Power proposes an increase for the low-end consumers (under 100 units a month) from Rs 1.38 currently to Rs 2.60 in FY14 which will touch Rs 3.50 per unit in FY16, while RInfra has not proposed any increase till FY15. It currently charges this segment of customers at Rs 3.50 per unit, which will remain unchanged till FY15 and will rise to Rs 3.74 in FY16.

Accusing the Tatas of cherry-picking its customers, RInfra said, "it serves 21 lakh smaller consumers, while Tata Power is cherry-picking only high-end consumers. MERC has already warned Tata Power from cherry-picking of high-end consumers."

Tata Power has further alleged that "stable tariff plan proposed by RInfra is a ploy to protect the interests of its large customers who have been increasingly switching over to its network due to lower costs."

"With around 70 percent of our customers being low-end and consuming under-300 units a month and thousands being added each month, the proposed hike by RInfra in wheeling charges could significantly hit the low-end changeover customers who have shifted to us and is thus a vindictive approach of RInfra," Tata Power said.

Pointing out that RInfra is seeking to increase the cross-subsidies, it said the move is in violation of the previous MERC order on cross subsidies, which had ruled that such charges should be reduced to 20 percent of opening charges.

"Instead RInfra is seeking enhanced cross-subsidies and that its tariff proposal is anti-consumer and anti- competition as it interferes with the customer's right to switch over to a competitive tariff provider," Tata Power said.

Accusing RInfra of blocking customers from switchover, Tata Power said, "its network expansion will facilitate customers to shift to its network, as opposed to a third-party network which will significantly reduce their bills".

When contacted an RInfra official defended the Rs 1,200 crore capex plan to upgrade the network, saying being a licensee, it has to be network-ready and that the capex charges will be recovered only over the next 25 years.

"The higher capex reflects the anticipated load growth in future as we have to improve our load growth and network ready. We expect a load growth of 3-4 percent over the next four years. Also, wheeling charges constitute only 10-12 percent of the total cost as 80 percent of cost come form power purchase and the rest from overhead and other costs," he said.

On higher wheeling charges, the Reliance official said, it is detailed in the proposal to the MERC and are in line with the August 22, 2012 order of the regulator.

"Wheeling charges in line with MERC order. It was fixed in June 2009 and since then the cost has gone up. The proposed wheeling charges reflect only the current cost. Wheeling charges will go up for RInfra as per the Tatas' commitment to the MERC under which it had said it will have its own network in 11 clusters within one year from August 2012.

Currently, the Tatas use the RInfra network to serve 3 lakh consumers in 11 clusters, he said.


First Published: Friday, April 5, 2013 - 23:35
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