FPJ Exclusive: MahaVitaran proposes tariff hike; MVA disposes, fearing backlash

Mumbai: Fearing a backlash over the state electricity distribution company (MahaVitaran)'s proposed tariff hike, the Maha Vikas Aghadi government on Friday clarified that the residential consumers and farmers would not have to bear the burden, as they would continue getting power at the present rates.

The state government's move comes after MahaVitaran sought an average 6 per cent hike in the tariff proposal it placed before the state electricity regulatory commission (SERC).

MahaVitaran supplies power to over 2.50 crore consumers across the state. The state government may provide a subsidy to MahaVitaran through a budgetary allocation, to preclude the burden being passed on to consumers.

The distribution company has submitted an annual revenue requirement and tariff proposal for five years and has asked for an average hike of 5.80 per cent for 2020-21, 3.25% for 2021-22, 2.93% for 2022-23, 2.61% for 2023-24 and 2.54% for 2024-25.

It has argued that tariff revision is necessary to ensure recovery of full cost of services from consumers to sustain its operations, bridge the revenue gap and meet additional costs arising from an increase in generation and transmission costs, regulatory assets and its legitimate expenses.

Its revenue gap has widened due to additional costs which are beyond its control, the company says.

The revenue gap for the period between 2020-21 and 2024-25 has been estimated at Rs 46,476.66 crore and the net recovery required from tariffs works out to Rs 60,313.11 crore.

Power Minister Nitin Raut, who met the MahaVitaran officials, quite categorically stated that it was not binding on the government to accept the tariff hike proposed by the company. '

'Maha Vikas Aghadi partners have a consensus on not to pass on any additional tariff hike burden to consumers. So far, MahaVitaran has submitted its proposal to the SERC, which has yet to deliver its order.

The tariff relief given by the previous BJP government to industries in the underdeveloped Vidarbha and Marathwada regions will continue. The state government may improve the scheme,'' he noted.

It is a Catch-22 situation for the state government, as it has to strike a balance between providing much-needed help to MahaVitaran for its revival and at the same time, protect consumer interests.

MahaVitaran has to recover arrears of over Rs 25,000 crore from agricultural users alone. Raut's clarification came after the chief of the Maharashtra State Energy Consumers Association, Pratap Hogade, opposed the proposal, saying that the cost of power is too high in Maharashtra.

''The tariff revision sought by MahaVitaran is unwarranted,'' he noted. On the other hand, energy expert Ashok Pendse said, the state government, as per the provisions of the Electricity Act, 2003 (EA), can offer subsidy to specified consumers to reduce the tariff burden but other than that, it has no role in tariff design.

''Tariff is decided by the SERC after hearing the consumers of the state on the proposals by the MahaVitaran. If the SERC tariff order is not acceptable, then the government can go to the appellate tribunal and get a stay.

Alternatively, the government can give directions under section 108 to the SERC but then the consequences will have to be borne by the government, as far as the financial burden is concerned,'' Pendse said.

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