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Tata Power barred from cherry picking R-Infra consumers

Source : BUSINESS_STANDARD
Last Updated: Tue, Dec 25, 2012 19:01 hrs
CLSA says India power sector to see tougher times

Tata Power has been barred from cherry picking consumers of Reliance Infrastructure (distribution) under the switch-over process in Greater Mumbai. In a landmark order, the Appellate Tribunal on Electricity (ATE) has rejected Tata Power's petition challenging Maharashtra Electricity Regulatory Commission's (MERC) order in this regard. The ATE has also ruled that the change-over consumers are liable to pay cross-subsidy surcharge to R-Infra for using its network.

ATE in its order said, "The state commission is required to look after not only the interest of the consumers but also the interest of licensees. Therefore, the state commission, while deciding that the change-over consumers are liable to pay cross subsidy surcharge to R-Infra for using its network, has, in fact, taken into consideration the interest of the consumers, as well as the interest of the licensees. Therefore, the findings and directions given in the impugned order by the state commission, which would promote healthy competition, are perfectly justified."

A Tata Power spokesman told Business Standard, "The company is studying the order and will be able to comment on the same in due course of time."

POWER CIRCUIT
  • ATE upholds MERC order levying cross subsidy surcharge on changed-over consumers
  • Judgment reaffirms need to promote healthy competition, bars Tata Power from cherry picking
  • R-Infra consumers relieved of tariff shocks

An R-Infra spokesman said, "We are happy that the Hon'ble ATE agreed with us that Tata Power is laying its network selectively and is cherry picking high-end consumers. The ATE order will protect the interest of 2.3 low-end subsidised consumers and will save them from huge tariff shock."

As reported by Business Standard, MERC, in its order delivered in August, had said a ward-wise cherry picking by Tata Power Company was evident, especially single consumers from categories other than residential. MERC had observed though there were change-over consumers in surrounding areas, Tata Power had laid its network only for single consumers without laying one for the remaining change-over consumers in the surrounding area.

MERC had also directed Tata Power Company to conduct switch-overs only for those who consumed up to 300 units of electricity a month. However, MERC clarified the restriction was limited to residential consumers for a year from the time the order was passed, and it would review the status of the switch-over and new connections added in identified areas during this period before deciding on its strategy for the next year.

ATE's order is expected to promote competition in Mumbai's fast-changing power sector. As high as 90 per cent of Tata Power's sale is done to high-end, cross-subsidised consumers, including the Railways, refineries, large housing and commercial complexes, multiplexes, etc. However, only 10 per cent sale of power is made to low-end consumers coming from the upper-middle class.

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