This is with reference to a news article headlined "The spiralling price of power", published in dna on June 17, 2014.
R-Infra has never resorted to stalling consumer migrations. The MERC has imposed restrictions on migration of consumers due to Tata Power Company's discriminatory approach like denying connections to low-end consumers, cherry-picking high-end consumers and selective network laying activities.
There were no restrictions on TPC to lay the distribution network and supply to the consumers for meeting its Universal Service Obligation. However, TPC failed to lay its network as has been held in various orders of MERC and APTEL. The benefit of TPC tariff is not reaching to the consumers because of its own failure.
On both, Cross Subsidy Surcharge (CSS) and Regulatory Asset Charge (RAC) have become effective from April 2014 and adding 50-60% burden on the consumer... The facts are the power purchase price of R-Infra, from 2004 to 2008, was comparable with the other utilities of Mumbai – TPC and BEST. Even the tariffs were more or less the same, despite the skewed consumer mix.
The power purchase cost went up in 2009 due to the unilateral withdrawal of 272MW bulk power supply by TPC. MERC appointed independent agency Administrative Staff College of India (ASCI), that has also observed the same and MERC accepted the ASCI report.
RAC represents a deferment of recovery of expenses as decided by the regulator primarily to balance the tariff and to avoid tariff shock to the consumers. Similar RAC also exists in the tariff orders of BEST and TPC.
CSS is levied on consumers who source power from sources other than distribution licensee whose network is being used, ie open access. Further, MERC allowed changeover from R-Infra to TPC from October 2009, without determining CSS.
In an appeal filed by R-Infra, the Appellate Tribunal has held that MERC has incorrectly determined CSS and prescribed the correct methodology to calculate CSS. Had MERC determined correct CSS earlier, there would not have been steep hike in CSS or applicability of RAC.
Our reporter replies
Para 99 (page 76) of the Supreme Court judgment of July 8, 2008 clearly states that the so-called quasi judicial bodies, MERC and the APTEL, over-stepped their jurisdictions by not allowing TPC to supply electricity to consumers in their license area and consumers had the right to choose a supplier.
TPC indeed got more requests from high-end consumers after MERC's interim order of 2009 allowed any consumer – based on the SC verdict – to change over from R-Infra to TPC. But in a sudden deviation from the apex court's verdict in 2012, another MERC order limited changeover to only residential consumers with consumption of below 300 units. So what cherry-picking is R-Infra talking of?
RAC, as pointed out even by ASCI, was due to R-Infra's high power purchase costs. This was largely because of a lack of power purchase agreement that forced R-Infra to acquire power at exorbitant rates.
As a result, consumers are paying high energy costs due to a regulator that does not promote competition.
The story merely draws an inference from the past, now that the BEST is understood to be making similar appeals to guard its consumer base against moving over to TPC.
We stand by our story.