Tata Power will refund close to ₹100 crore to residential and government electricity consumers owing to a reduction in power purchase cost. The cost of procuring electricity decreased due to a fall in the price of imported coal bought by their power generation arm.
Monthly Benefit to Consumers
The refund, subject to a favourable order from the Appellate Tribunal for Electricity (APTEL) and statutory regulatory approval, will be initiated through the fuel adjustment charge (FAC) for government customers as well as residential consumers drawing 0-100 and 101-300 units every month.
The current accumulation works out to FAC offset in the range of 15-50 paise per unit. Instead of passing on the relief in multi-year tariff (MYT), at the end of the year, the firm has expressed its willingness to distribute the benefit every month.
Anticipated Impact and Future Prospects
So far, Tata Power has earmarked around ₹67 crore in its books of accounts for April and May 2023. It anticipates close to ₹30 crore in June. The consolidated amount will be adjusted in the power bills after APTEL's order, and the tariff will be reduced thereafter.
"Owing to lower imported coal procurement costs, we have saved approximately ₹67 crore in just two months and the benefit will be passed on to certain categories of consumers in Mumbai," said Nilesh Kane, Chief Distribution, Mumbai Operation, Tata Power. The firm's distribution business procures electricity from its power generation arm, which in turn has been purchasing Indonesian coal. The price of this fuel has gone down, resulting in a lesser power production cost.
Tata Power moved APTEL based on the Maharashtra Electricity Regulatory Commission's (MERC) MYT order, wherein power supply to residential connections became dearer by 10% compared to the previous fiscal.
Tata has 7.5 lakh consumers in Mumbai
At present, the company has around 7.5 lakh consumers in Mumbai, with about 5.5 lakh of them being changeover consumers. While the company representatives claim that they have added nearly 70,000 consumers in the last couple of years, they also admit that in the last two months, they have received a few hundred applications from consumers wanting to switch to their competitors due to higher tariffs.
Once the APTEL order is in their favour, the company anticipates an average of 10,000 additional new connections being issued by them annually for the next three years.