Maharashtra eases power payment norms for industrial consumers

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Published: April 2, 2020 2:20:58 AM

The ongoing lockdown in seen to take a toll on the finances of the state-run discoms which are finding it difficult to continue meter reading exercises and collect payments from consumers.

“The commission will take an appropriate view on the additional expenses that are likely to be incurred by the distribution licensees on account of additional interest on working capital” while reviewing tariffs, MERC said.“The commission will take an appropriate view on the additional expenses that are likely to be incurred by the distribution licensees on account of additional interest on working capital” while reviewing tariffs, MERC said.

To provide relief to commercial and industrial power consumers in the wake of Covid-19 pandemic, the electricity regulator of Maharashtra has asked the state’s power distribution companies to put a moratorium on payment of fixed charges to its large consumers for the next three billing cycles starting March 25.

While acknowledging that discoms will have to borrow additional working capital to make up for the shortfall stemming from the lower cashflow due to the moratorium, the Maharashtra Electricity Regulatory Commission (MERC) has asked them to provide relief to power consumers from the burden of the incremental working capital interest.

“The commission will take an appropriate view on the additional expenses that are likely to be incurred by the distribution licensees on account of additional interest on working capital” while reviewing tariffs, MERC said.

Electricity bills have two components: fixed and variable. While the fixed charges are predetermined amount that consumers pay on a monthly basis, the variable charges are based on the volume of electricity consumed. The monthly fixed charge of industrial and commercial consumers in Maharashtra are in the range of `303–411 for every kilovolt-ampere-hour (kVAh).

Apart from the state-run Maharashtra state electricity distribution company (MSEDCL), which distributed power in most of Maharashtra, the other discoms in the state are Brihanmumbai Electric Supply and Transport (Best), Adani Electricity Mumbai and Tata Power Company. Apart from MSEDCL, the other discoms had cumulatively claimed revenue requirement of Rs 14,852 crore in FY21 but only Rs 13,470 crore was approved by the regulator. MSEDCL had claimed revenue requirement of Rs 4,52,411 crore for FY21-FY25 but MERC approved Rs 4,21,113 crore for this period.

In its latest tariff schedule for FY21, MERC has approved an average tariff reduction of 7% for the industrial and commercial sector. To further encourage industrial consumption for MSEDCL consumers, the regulator has also introduced a concept of incremental consumption rebate of Rs 0.75/kVAh to further reduce their effective tariff. Tariff of residential consumers is reduced by 5%. Agriculture tariff remains low with 50% of cross subsidy continued to be extended to this category. Maharashtra has already suspended meter reading and physical bill distribution work and has asked the discoms to issue bills on average usage basis ‘till the current crisis gets subsided’.

The ongoing lockdown in seen to take a toll on the finances of the state-run discoms which are finding it difficult to continue meter reading exercises and collect payments from consumers. To make matters worse for discoms, their revenues are seen to decrease on account of lower usage by high paying consumers such as the railways, industrial and commercial users. Though the household sector consumes more than a third of electricity supplies, it is cross-subsidised by industrial and commercial users of electricity. Tariffs on domestic consumers is on an average around 40% lower than that for industrial users of power.

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