REL Approaches MERC On Tata Tariff, Investment

Mumbai, September 16: | Updated: Sep 17 2003, 05:30am hrs
Reliance Energy Ltd (REL), in an attempt to take Tata Power Company (TPC) head on, has approached the Maharashtra Electricity Regulatory Commission (MERC) seeking an order directing TPC to audit all its investments of Rs 2,000 crore and review its base tariff and fuel adjustment cost (FAC).

Simultaneously, REL, which has already received bids for supplying 1,000 mw to get rid of standby charges payable to TPC, has also requested MERC to direct TPC to return all 18,000 consumers lured away by TPC since February 1998.

REL, in its communication of September 8, had sought that TPCs investments Rs 1,200 crore in Tata Telecom and Rs 800 crore for setting up sub-stations and laying cables mentioned in the investment chart in its annual report be audited. Though REL is open to competition in its area of supply, it should be fair and equal. Distribution of retail power in RELs area by TPC will be fair only when TPCs monopoly over supply of bulk power is abolished, tariffs to REL are reduced, TPC shares for burden of subsidy to residential consumers and the universal services obligation is applicable to TPC as well ... for distribution under the Electricity Act 2003, REL said.

REL sources confirmed that it has already filed an application in this regard with MERC. MERC sources confirmed that the regulator has received RELs letter and it will look into the matter.

REL has called upon MERC to reduce TPCs bulk supply tariff (BST) to a realistic level, by bringing about uniformity in tariffs applicable to all purchases of bulk power from TPC so that RELs consumers do not subsidise consumers of other purchases or that of TPC. Currently, TPCs bulk supply tariff to Brihanmumbai Electric Supply and Transport is Rs 3.23 while it is Rs 3.53 to REL. However, TPCs BST for its own consumers directly serviced is 66 paise less than the above given tariffs.

TPC sources told FE that these issues have already been discussed during MERCs hearings. TPCs tariff has been settled by the state government under Schedule 6 of the Electricity Supply Act, 1948, by the government itself in 1998. Curiously, REL has also been charging tariff by the same government directive.

TPC sources said that MERC has already issued an order on June 30 with regard to retail supply by TPC, which has been challenged in the high court. If REL wants to take on TPC, it is free to approach the court, sources noted.

The Mumbai high court will hear TPCs petition challenging MERCs order prohibiting TPC into retail supply on September 22.

REL has also appealed to MERC to direct TPC to pay for RELs loss of revenue in the previous years, including interest worth Rs 305 crore on account of rebates given by REL and cumulative shortfall of Rs 72 crore for previous years. Alternatively, the cumulative shortfall be allowed as Regulatory Asset to be recovered in the financial year beginning April 2005, it argued. REL has submitted that it should be allowed to recover payment towards standby charges from the consumers and in the interim period grant adhoc relief to REL in order to reduce the strain on cash flows.