Aptel rules in favour of Reliance Infrastructure

Aptel upholds Maharashtra Electricity Regulatory Commission order allowing R-Infra to recover cross-subsidy surcharge from Tata Power consumers

Mumbai: The Appellate Tribunal for Electricity (Aptel) on Wednesday upheld the Maharashtra Electricity Regulatory Commission’s (MERC) order which allowed Reliance Infrastructure Ltd (R-Infra) to recover cross-subsidy surcharge (CSS) from Tata Power Co. Ltd’s consumers who migrated from R-Infra to Tata Power. 

Aptel also upheld MERC’s order of allowing R-Infra to recover regulatory asset charges from Tata Power consumers who migrated from R-Infra to Tata Power. In the power distribution sector, high consumption consumers such as industry and commercial establishments like shopping malls, multiplexes and commercial buildings are charged much higher tariff than the average cost of supply and this amount is used to subsidies tariff of poor consumers, farmers and residential consumers. This higher charging of few categories of consumers is called cross-subsidy. 

The deferred tariff hike is called regulator assets in an industry parlance. After making scrutiny of tariff proposal of the distributor, the regulator sometimes find its claim for tariff hike to be justified but allows such a hike in staggered manner over few years to avoid tariff shock to consumers. 

Interestingly, the order of the tribunal was not uploaded on its webstie but Tata Power issued a statement which says, “We are studying the order, particularly in line with the Tribunal’s direction for the need of uniformity in the treatment of regulatory assets (RA) by the two power distribution utilities. We understand that the Tribunal has accepted Tata Power’s methodology wherein RA is part of energy charges, and invalidated charging of RA as separate item in other utility’s invoicing.” R-Infra declined to comment. 

In 2008, the Supreme Court recognized Tata Power’s right to supply power to retail consumers also in suburban Mumbai, the area served by R-Infra exclusively till then. Subsequently in 2009, MERC issued a detailed protocol allowing R-Infra consumers to migrate to Tata Power. The MERC also allowed Tata Power to use R-Infra’s distribution network to supply power to its customer by paying what is called wheeling charge to R-Infra. 

However subsequently, R-Infra moved to MERC accusing Tata Power of doing cherry picking and only supplying power to high-end consumers, while refusing to supply power to consumers from slums and other disadvantaged sections of the society and demanded that CSS should be levied on high-end consumers who have migrated to Tata Power and also allow the recovery of RAs from such customers. In August 2012, finding merit in R-Infra’s charges, MERC permitted R-Infra to recover CSS and RAs from such consumers of Tata Power who had migrated from R-Infra but still served using R-Infra’s distribution network. This MERC order was challenged by Tata Power, Mumbai Grahak Panchayat and Indian Hotel and Restaurant Association, among others.

Source:livemint