Mumbai residents wait for one grid to power them all

The rage over inflated bills that Adani Electricity consumers have received has triggered a debate on the need for a uniform power tariff in Greater Mumbai. The city, unlike others, does not have a single distribution licensee, like a state electricity board.

Currently, there are three major privately owned power distribution companies (discoms) including Tata Power, Adani Electricity (which took over Reliance Infrastructure's Mumbai distribution business from August 29), and the Brihanmumbai Electric Supply and Transport (BEST). Together these three supply to nearly 45 lakh consumers in the city. Then there is the state-run Maharashtra State Electricity Distribution Company (MahaVitaran), which supplies to suburban Mulund and Bhandup.

Currently, the per unit tariff charged for consumption of 0-100 units by these distribution companies ranges between Rs 2.91 and Rs 4.50, for 101-300 units between Rs 5.16 and Rs 8, for 301-500 units between Rs 7.96 and Rs 11.48, and for 500 units and above between Rs 9.45 and Rs 14.10.

Stakeholders have raised concerns over different electricity tariffs and suggested that retail tariffs should be uniform across Mumbai, irrespective of which licensee supplies the electricity.

Also Read: Mumbaikar's temper rise on the back of surging bills

PwC, in its report on uniform retail tariff released in 2011, had said the tariff rates are calculated on the basis of aggregate revenue requirement (ARR), and around 80 per cent of ARR is made up of power purchase cost.

Power for distribution licensees in the city is sourced from Tata Power's generation plants in Mumbai, Reliance Infrastructure's Dahanu plant, and external sources. MahaVitaran draws power from Maharashtra Power Generation Company and others. The difference in tariffs is attributable to varying costs of supply, which is contributed mainly by the power purchase cost incurred by licensees.

A former chairman of the Maharashtra Electricity Regulatory Commission (MERC), VP Raja, says that uniform tariff for Mumbai isn't possible, but can be considered as a compromise formula for lower-end customers — those consuming 0-100 units a month.

"'But the focus of the Electricity Act, 2003, is to promote competition and improve productivity. If uniform tariff is applied, it will kill the competition," he said.

Power analyst D Radhakrishan says uniform tariff for domestic consumers should be introduced, while bulk consumers can pay rates commensurate to the demand and supply trajectory.

A former MERC member, Jayant Deo, argued that the concept of uniform tariff "structure" and not "rates" is permitted under the Electricity Act, which demands safeguarding consumer interest while recovering electricity cost reasonably. This would also encourage competition.

"In view of multiple licensees and a substantial domestic consumer base, demand for uniform rates will not sustain. This will deny competition benefits to several consumers as efficiency gains will be utilised to support cross-subsidies required for uniform rates," Deo said.

Successive governments have attempted to bring a uniform rate, but refused to bear the necessary expenses citing financial constraints. The erstwhile Congress-NCP government said it could not take a hit of Rs 2,000-2,500 crore annually, as discoms are from the private sector.

The incumbent BJP government has repeatedly said uniform tariff may be considered for 0-100 and 101-300 units categories, but there has been no decision so far due to lack of agreement among the stakeholders.

Lost in transmission

Mumbai currently enjoys a unique status for 24x7 power supply even during April-May and October heat. The normal power supply in the entire city ranges between 2500 MW to 3,400 MW but the demand rises to 3,600 MW in summer. But the demand in is set to soar to 5,000 MW in the near future, on account of spurt in infrastructure projects including Monorail, Metro rail, sea links and coastal roads.

However, transmission constraints may impact power transfer to meet burgeoning demand. Both Tata and Adani have undertaken transmission strengthening but several hurdles including 'right of way' and clearances from a host of agencies remain. And except Tata Power, none of the other three entities has its generation project situated in the city.

IDAM Infra managing director Balawant Joshi says that the current scenario has been caused by many reasons including stranded assets, duplicate wire network and complicated evolution of competitive frameworks. "Multiple distribution licensees creating their own distribution network is a waste of national wealth. MERC should take the initiative to create one Mumbai grid to avoid capex in future. It is feasible to implement such a structure with proactive regulatory initiative," Joshi says.

MERC former chairman VP Raja says: "There is a need for laying high voltage, direct current transmission lines for transfer of power from outside."

Activist Ashok Pendse said: "The hurdle is strengthening transmission capacity. Voltage level of transfer points at Vikhroli and Borivali has to go up. Higher voltage such as 132 kv would mean higher transfer capacity. If this is achieved, then competitively bid cheaper power can be brought from outside for Mumbai."

Rs 7.65 – Adani’s per-unit tariff cost until one is consuming up to 300 units; beyond this, it is Rs 9.29

Rs 7.51 – Tata Power’s per-unit tariff cost until one is consuming up to 300 units; beyond this, it is Rs 11.49 

PECULIAR SUPPLY MATRIX

• Mumbai is the only city where four different distributors supply electricity: Tata Power, Adani Electricity (which took over from Reliance Infrastructure), Brihanmumbai Electric Supply and Transport (BEST) and Maharashtra State Electricity Distribution Company (MahaVitaran)
   
• People have the option of changing their supplier under open access, but state-run MSEDCL, which supplies to nearly a lakh consumers, is out of open access, as it cross-subsidises farmers
   
• Tata supplies to high-end consumers, big housing societies and commercial complexes. Most of their consumers have chnaged over from Adani. TPC generates some 1,400MW at its Trombay plant, rest from its hydro power plants, other suppliers 
   
• BEST and Tata Power share the island city —with majority supplied by BEST, which has dropped its tariff by 10 per cent. Their consumer mix is such that nearly 4 lakh are those consuming less than 300 units per month. BEST has a power purchase agreement (PPA) with Tata of 752 MW, more is purchased from national grid
   
• Suburbs are mostly supplied by Adani Electricity. Of total, around 10L fall in 300 units a month bracket. Adani requires a total 1,892 MW, of which 500 MW is sourced from its power plant situated at Dahanu and the rest is procured through PPAs 
   
• Island (electri)city: Besides, Mumbai has islanding system which is in place since 1997. Islanding means anytime that the Maharashtra system gets disturbed, the state load despatch centre (SLDC) disconnects Maharashtra from the Mumbai system and runs it as an island, shielding it from any problems. The system has been successful on 16 occasions, when Mumbaikars were unaware of disturbances experienced in the rest of the state