Urja Gyan

15-20% cut in power tariffs

The Maharashtra cabinet on Monday approved a 15-20% cut in power tariffs in all parts of the state except Mumbai, a move prompted by Delhi chief minister Arvind Kejriwal’s decision to cut rates by up to 50% (through a subsidy).

Still, a power tariff cut in Mumbai isn’t entirely off the table; a government official who spoke on condition of anonymity said the cabinet will next week discuss ways in which this can be done.

Maharashtra’s approach is similar to Delhi’s and will burden the state’s exchequer by around Rs.7,000 crore a year.

Analysts have already warned that Kejriwal’s move could be imitated by other states, derailing a rational approach to power pricing that has been evident for the past two years.

Consumers in Mumbai will not benefit from the lower rates because the city is served by three different private utilities. The municipal undertaking Brihanmumbai Electrical Supply and Transport (BEST) supplies power between Colaba and Nariman Point in the south and Sion and Mahim in the north, while Tata Power Co. Ltd and Reliance Infrastructure Ltd (R-Infra) compete with each other in the suburbs.

The rest of the state is served by the state government owned power distribution utility Mahavitaran Ltd. The Nationalist Congress Party (NCP), part of the Congress-led coalition government in the state was opposed to the idea of lowering power tariffs in Mumbai, as it would have been tantamount to giving a subsidy to private utilities.

Earlier this month, Congress members of Parliament from the city, Sanjay Nirupam and Priya Dutt, led a protest march against R-Infra for charging high tariffs. Nirupam also wrote a letter to chief minister Prithviraj Chavan demanding a reduction in tariffs. On Sunday, south Mumbai member of Parliament and Union minister of state for telecommunication and IT Milind Deora also joined the chorus of leaders seeking a reduction in power tariffs across the state.