Mumbaikars will be the first in the country to have the option of choosing their power supplier.
Mumbaikars will soon be able to select their electricity supplier
MUMBAI: Mumbaikars will be the first in the country to have the option of choosing their power supplier.
The Supreme Court on Tuesday opened the Mumbai electricity supply market for competition by ruling that Tata Power was authorised to supply power to retail consumers.
Mumbaikars could benefit in the long run as direct supply from the producer could only mean cheaper power.
Till now, the Tatas had the licence to supply only to wholesalers like Reliance Energy and Brihanmumbai Electric Supply and Transport (BEST) who, in turn, supply to retail consumers. The Tatas were allowed to supply to factories, the railways etc., that is, those who consume over 1mw.
Through this landmark decision, the apex court has allowed the entry of a second licensee to supply electricity. This is the first time a second licensee has been appointed to supply power in the jurisdiction of existing licensees. Reliance Energy is a licensee for the suburbs, while BEST is the sole distributor for the island city.
Tata Power generates 1,777MW but of this 800MW has been committed to the BEST through the power purchase agreement and 477 MW is supplied to its existing bulk consumers.
With only 500 MW remaining, the Tatas may not have enough power to cater to individual consumers in the immediate future though they have the choice of scouting for power from other suppliers in the country and providing it to consumers.
However, the enforcement of the Electricity Act 2003 will not allow it to choose the consumers.
Ideally, a utility would prefer to sell its power to high-end consumers. But under the Act, utilities can decide the area of operation and will have to supply electricity to every consumer from that area.
A bench headed by Justice Altamas Kabir pronounced this order turning down Reliance Energy’s contention that Tata Power had the licence to supply electricity only to bulk consumers. REL had procured an order from the Appellate Tribunal for Electricity (ATE) on May 22, 2006, that Tata did not have the licence to supply to consumers directly and could supply power only to bulk consumers.
This was challenged by Tata Power in the Supreme Court.
“We are committed to supplying reliable and quality power to Mumbai and welcome the judgment,” said a Tata Power spokesperson.
According to an official of Reliance Infrastructure, the company that owns the Reliance Energy brand, “We believe in ‘choice for the customer’ and hence welcome the decision.”
BEST, on the other hand, does not feel threatened as it has been categorised as ‘local authority’ free from competition.
But Tatas will now have to formally apply for a licence to distribute which will be followed by public hearings,” said SA Puranik, additional general manager (electric supply) of BEST.
“This is a beneficial move for the 2.7 million consumers who will get rid of the monopoly exercised by REL,” said Rakshpal Abrol, president of the Bombay Small Scale Industries Association.
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