Tata Power, R-Infra differ on power tariff

Tata Power consumers, during the ongoing summer, may expect an average of 6% reduction in their tariff. However, Reliance Infrastructure (R Infra) consumers may face a shock as the company has sought an average of 18% rise in the power tariff. Both Tata Power and R-Infra distribution companies have said they have submitted their mid term review (MTR) proposals for 2015-16 to Maharashstra Electricity Regulatory Commission (MERC) which is expected to deliver its orders by end of April or in May.

Tata Power has estimated an average Power Purchase Cost for FY 2015-16 at around Rs 4.25 per unit excluding transmission and standby charges. In case of R Infra, it is expected to be around Rs 4.30 per unit for the same year.

Tata Power distribution has a consumer base of around 6,00,000 in the island city and parts of Mumbai suburbs. At present about 538000 consumers are availing supply from Tata Power on R Infra’s wires. Out of these consumers about 506,000 consumers are residential consumers, with about 87% of them consuming less than 300 units per month.

On the other hand, R Infra supplies power to 2.9 million consumers especially in the northern and western suburbs. Out of over 2.9 million consumers about 500,000 residential consumers have migrated to Tata Power. However, almost all these consumers continue to avail the network services of R Infra distribution.

For the residential consumers using power in the range of 0-100 units, Tata Power has not made change in the per unit tariff of Rs 2.62 while R Infra has proposed an increase to Rs 4.95 from Rs 4.88. Further, for consumption of 100-300 units of power, Tata Power has kept the per unit tariff unchanged at Rs 4.56 while R Infra has sought increase in tariff to Rs 7.58 from Rs 7.45.

For above 300 units, Tata Power has  proposed a decrease in its per unit tariff to Rs 7.56 from Rs 8.19 while R Infra has proposed a 9% rise to Rs 9.10 from Rs 8.33. For above 500 units Tata Power’s tariff will fall to Rs 9.40 from Rs 10.27 while R Infra has proposed a 4% rise to Rs 11.15 from Rs 10.77.

As far as high tension industry consumers are concerned, Tata Power has proposed a reduction in per unit tariff to Rs 8.30 from Rs 8.82 and similar reduction is sought for high tension commercial consumers to Rs 8.60 from Rs 9.16. In case of R Infra, the tariff for high tension industry consumers is  expected to go to Rs 9.26 from Rs 9.05 per unit and for high tension commercial consumers to surge to Rs 11.23 from Rs 11.10 per unit. 

Tata Power COO and Executive Director told Business Standard, “We have projected the additional revenue requirement (ARR) as part of multi year tariff (MYT) (including expenses) for FY 2015-16 after doing a detailed working in line with the entitlements as per the MYT Regulations which has been presented to MERC in the Mid Term Review petition. The ARR concept is always revenue neutral as per regulations which has been followed. However, the actual sales compared to projected sales and fuel cost variations are treated during annual tariff review (ATR)/ MTR reviews.”

A R Infra spokesman said, “For FY 2015-16 R Infra distribution has proposed reduction in energy charges of 8.5%; however to prevent interest burden of Rs 1,000 crores on the consumers, it has also proposed recovery of past revenue gaps in FY 2015-16. This is resulting in proposed tariff hike of 18%. If the said recovery was spread over a span of 6 years, alike proposed by other licensee (Tata Power), then the tariff hike would be only 1% for majority of consumers categories. The Hon’ble ATE has directed that the period of recovery of past revenue gaps should be identical for licensees in the common area of supply.”