MERC unveils 6.5 per cent tariff hike

As a result, the board may have to back down Enron’s Dabhol power plant orNational Thermal Power Corporation’s plants during night time or non-peakperiods, which are producing costly power.

However, MSEB chairman Asoke Basak, says: “How can they issue an order likethis. We have contractual obligations and serious discussions have to takeplace with Enron over whether the power purchase agreement provides room forthis order." All efforts to contact the Enron spokesperson proved futile.A visibly upset Basak added that there was a huge gap between what had beendemanded and that which had been granted. "They have not mentioned fromwhere MSEB will generate this shortfall in funds," he said.

But, a petitioner against MSEB’s tariff hike proposal, Pradyumna Kaul, says,"This has been a step in the right direction, because the board will standto gain a minimum of Rs 300 crore if it backs down DPC plant during nighthours."

Though there has been drastic rationalisation in tariffs, residentialconsumers will be the most affected. For example, for those consuming 30 to50 units of power every month at Rs 1 per unit, will now be charged Rs 2.50per unit, a whopping 250 per cent hike.

This is owing to the change in the MSEB slab structure by the Commission,which previously used to be from 0-50 units and 50-100 units. The slab iscurrently placed at 0-30 and 30-100. However, there are cases of a reductionin tariff in certain categories of high tension industrial consumers.

Another significant aspect of the order is the instruction given to MSEB toinstal Time of Day (ToD) tariff for high tension consumers. As per theorder, MSEB has to instal ToD meters for all HT industrial consumers bySeptember 2000 and for all other industrial consumers, except the Railways,by December 2000. This is mainly to curtail the imbalance in the powersupply scenario which the board faces due to its huge demand during the peakseason.

By this move, Enron’s expensive capacity addition will also directly beunder threat as the board will not be able to justify DPC power if thedemand during peak season comes down. It is yet to be seen what stance theCommission will adopt on the massive capacity addition envisaged by thePhase II of Dabhol Power Company.

When asked whether MSEB was planning to challenge this decision in court,Basak replied in the negative and added that if amendments to this orderwere required, then the board would approach only the Commission and nolegal proceedings were being planned.

This hike was challenged in Mumbai High Court by various industryassociations, including Thane Belapur Industries Association, and the courthad issued a positive verdict to the petitioners. Though the board had filedan appeal in the Supreme Court, it was rejected on grounds that theCommission would decide whether the hike has to be implemented.

The High Court order reads "…the tariff hike impugned in the petition inSeptember 1998 may also be examined by the state electricity regulatorycommission and the decision be send to this court which should be examinedwith parties.."

Though the final order is ready, there is no mention on the September hikes,experts argue. It is also learnt that certain industrial associations areplanning to move the court against this decision, though it could not beconfirmed with any of the associations. Since those hikes were drastic andalready implemented, the rational approach taken by MERC will not directlybenefit the industrial consumers.

Says Asoke Basak: "September issue is being treated separately and thematter is being discussed with us."

In fact, the Commission itself came into existence because it was mademandatory by the High Court in its verdict and it became binding on thestate government, though it was not very keen to do so. It is still beingdebated whether the Commission could officially announce the final orderbefore taking any action on the September issue.

September hikes
Despite MERC’s revolutionary order, the Commission has failed to issue anydirectives on the September 1998 tariff hike. This has left high tension andlow tension consumers in the dark, as the Commission was supposed toannounce a decision on the 22 pc hike implemented by MSEB in September 1998.