Maharashtra state power utility shocks consumers with steep levy- Go Solar

Mumbai: Around 22.5 million consumers of government-owned Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) have reported a substantial 10-12.75% increase in their bills.

MSEDCL caters to consumers living in the Mumbai suburbs of Mulund and Bhandup, Navi Mumbai and the rest of Maharashtra. Go Solar

While MSEDCL has justified the hike on account of fuel adjustment charge (FAC), the Maharashtra Electricity Consumers Federation has filed an intervention petition before Maharashtra Electricity Reglatory Commission (MERC) challenging the increase.

MSEDCL caters to consumers living in the Mumbai suburbs of Mulund and Bhandup, Navi Mumbai and the rest of Maharashtra.

Public sector undertaking Brihanmumbai Electric Supply and Transport Undertaking and private power distributors Reliance Energy and Tata Power supply electricity to Greater Mumbai.

The state utility levies FAC to adjust for the difference between the cost of power purchase projected at the start of the financial year and the actual cost.

Regulator MERC has allowed for FAC to provide MSEDCL with a means to reduce the loss incurred on account of power purchase at rates higher than those projected by the discom in its annual tariff plan.

The FAC ranges between a marginal 0% to 1% of the total energy bill per month at the start of the fiscal year and a maximum 7% by the end of the year. But the bills issued by MSEDCL for October levy 10% to 12.75 % FAC on the bills.

The average per-unit hike on account of FAC is 73.24 paise. The bills issued by MSEDCL for October, November, and December levy an additional FAC of 10% to 12.75% to account for the power purchased by it in July, August and September.

A circular issued by MSEDCL, a copy of which is with Mint, says the power distributor plans to recover Rs.591 crore per month as FAC from October to December.

The consumers’ federation has challenged this and accused MSEDCL of passing on to the consumers the cost of its mismanagement of power purchase agreements.

Pratap Hogade, president of the federation, said the FAC has never been in the range of 10 to 12.75%. “MERC has allowed FAC to adjust for the difference in projected and actual power purchase cost. But MSEDCL has hiked it beyond the permissible limit to make consumers pay for the purchase of expensive power even when power was available at cheaper rates in the market. This is a clear violation of merit order dispatch guidelines,” Hogade said.

In its tariff for the year 2015-16, MERC adopted what it called merit order despatch principles for power purchase agreements by MSEDCL. According to these principles, MSEDCL must buy power from all sources at the rates fixed by MERC and power purchase agreements must be guided by the criterion of the cheapest rate available.

While the state utility has filed a review petition before MERC, seeking clarifications in its tariff order, the consumer federation has alleged that the review petition challenges the merit order dispatch system itself. “The system protects consumers from taking the hit on account of unreasonable power purchase agreements that utilities sign and then make consumers pay for the extra cost,” the federation has claimed in the petition.


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