In a statement issued by the Thackeray he has demanded that,  state government should give subsidy to R-Infra, if it wants to give the higher tariff to R-Infra or otherwise it should withdraw the tariff hike.  And warned if our demand doesn’t get positive response from the government and the distribution utility then, we will launch an agitation against the tariff hike.

In its annual revenue requirement (ARR),   R-Infra which supplies power to around 2.8 million consumers in suburban Mumbai had asked for tariff hike amounting to Rs. 1300 crore.  However the power regulator only approved the hike to the extent of Rs. 1,000 crore.

It may be recalled that,  R-Infra’s power tariff hike was last year stayed by the MERC on the advice of the state government just before the October assembly polls.  The Shiv Sena had held violent agitation against the tariff hike. 

Subsequently power regulator appointed a Hydrabadbased staff administrative college as an agency to scrutinise to R-Infra’s accounts book and overall functioning.  However the investigative agency did not found any anomalies in the functioning after which stay was lifted earlier this year.

 The R-Infra who has no firm tie ups for power apart from its 500 Mw generation unit, needs to buy around 600 Mw to700 Mw of  power in the spot market every day, which makes its power costliest among all the three power suppliers in the Mumbai which includes Tata Power and BEST.

EB Bureau

Tata Power filed a writ petition in the Bombay High Court challenging Maharashtra government’s directive asking Tata Power to continue supply 360 Mw power to R-Infra who is distribution licensee for suburban Mumbai. Tata Power has prayed to court to issue immediate stay to state government’s directives till the petetion is being heard and disposed off.
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It may be recalled that, on 7 May state government advised the Tata Power to supply 360 Mw to R-Infra till 30 June at regulated rate and 200 Mw from 1 July to 31 March next year. In June last year Tata Power sent a notice to R-Infra of snapping 460 Mw of power supply from 1 April, which would have resulted either in inflated bills for R-Infra consumers whose tariffs are already high compared to the two other distribution utilities in Mumbai which includes Tata Power (distribution) and BEST or in load shedding.
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Anticipating public outcry, government asked Tata Power to maintain status quo till April end and appointed the committee of secretaries under the leadership of chief secretary to submit report about the issue. Accepting the committee’s recommendations government asked Tata Power to continue the supply of 100 Mw of power to BEST as per the power purchase agreement (PPA) and rest 360 Mw to R-Infra till June end and post 30 June 200 Mw till 31 March 2011.
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After heated exchanges between Tata Power and R-Infra who is responsible for current crisis and offers and counter offers to take over each other’s network, Tata Power finally on Wednesday moved to Bombay high court pleading to squash the Maharashtra government’s directives.
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In the petition company has observed, government’s attempt to give directives to Tata Power regarding its generation capacity is an attempt to bring a License Raj in the sector through side door which parliament intended to avoid by deregulating generation sector through enactment of Electricity Act 2003.
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Meanwhile Maharashtra government’s energy secretary Subrat Ratho only offered No Comments on Tata Power’s decision to move to Bombay high court against the state government’s directives.
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When contacted, R-Infra spokesman said,   Tata Power has gone in to the court against government’s directives so there is no question of reacting to it.  But when pointed out, Tata Power has made R-Infra respondent in the petition he said, we will respond to it at appropriate forum.

Tata Power also offered to take 4 lakh consumers of R-Infra at the lowest end who consume less than 100 units per month post July 1 and also pay wheeling charge of 37 paisa to R-Infra from its coffers for using R-Infra’s network.

We are being accused of doing cherry picking and only taking high end consumers of R-Infra but our offer clearly demonstrates our commitment to all Mumbai consumers, said S. Ramkrishnan executive director and CFO of the company.

It may be recalled that on Friday May 14, Tata Power announced that it won’t accept the state government’s advice of supplying 360 Mw of power to Tata till June end and 200 Mw till March 31, 2011. It further said, it has asked state load dispatch centre (SLDC) to divert 160 Mw of power to its own distribution arm from Sunday and asserted it will supply 200 Mw power to R-Infra only at Rs. 5.90 per unit and not at the regulated rate of Rs.4.40 per unit.

However, SLDC refused to divert 160 Mw as per Tata’s directives to its own distribution arm and continued the supply to R-Infra.

 Ramakrishnan said,  “We will request SLDC to supply 160 Mw power to our distribution arm as per our instruction, our response will depend upon what answer we get from SLDC.  However all the options including legal options are open but we sincerely hope, we won’t have to excursive legal option.

When contacted, R-Infra spokesman said, “We will study the proposal communicated by Tata Power and will examine whether the proposal sent by Tata Power is implement able or not.”

Last year, the Supreme Court allowed Tata Power to supply power to its distribution arm, which holds a Mumbai license. Subsequent to this ruling, Tata Power informed R- Infra that it would stop the current supply of 460 given to Reliance Infra. Tata Power threatened to pull the plug off by May first week. This forced the state government to intervene and give a directrative inorder to save the R-Infa customers from power cuts. The directative was given on the basis of the report submitted by the highlevel committe appointed to look into feud.

In the past one year period , 30,000cutomers Reliance customers switched over to Tata Power and to meet the requirement Tata Power is picking power from the spot market.

While it has pulled up Reliance Infra for failing to make alternate arrangements to make-up the shortfall, it has also asked Tata Power to continue supplying 360 mw to Reliance Infra till June 30. From July, Tata Power has been asked to supply 160 mw to its newly-acquired customers thereby bringing the supply to Reliance Infra down from 300 mw to 200 mw. The government says Tata Power will have to continue this supply of 200 mw till March 2011.

Tata Power  on the other hand, replied to the stategovernment that ” prima facie do not accept the order of the government of Maharashtra to supply power to Reliance Infra, as it would cause great hardship to our consumers . And keeps the legal option open”.

Meanwhile, responding to a government instruction to enter into long term agreements with power generation companies, Reliance Infra has submitted that it will open bids for 315 mw of power supply from April 1, 2011 as a mid-term arrangement.

The state government has also sought intervention from the Maharashtra Electricity Regulatory Commission (MERC) for a mechanism to ensure that Reliance Infra’s subsidised customers are not burdened with a higher tariff due to the migration of cross-subsidising customers to Tata Power.

The 2.8 million consumers of R-Infra from suburban Mumbai can now have a sigh of relief as Maharashtra government’s cabinet sub committee on infrastructure headed by chief minister Ashok Chavan has directed Tata Power to continue supply of 400 Mw of power to R-Infra till 1 July.

And R-Infra was categorically told, it is its responsibility to source power for its licences area and it can’t ask for state government to intervene every now and then, said senior official from state government’s energy ministry.

While Tata Power’s spokesperson could not be contacted for its comment on government’s decision,  R-Infra spokesman expressed inability to give comment as there was no official announcement from the government.

However government is yet to decide whether to issue directives to both these companies under section 11 of the Electricity Act 2003 or ask the state power regulator MERC under section 108 of the act to issue necessary directives to both the company, official said.

It may be recalled, on 31 March Tata Power was given directives by the state government to continue to supply 500 Mw of power to R-Infra till further orders who had issued a notice to R-Infra to snap the power from 1 April 2010 onwards.

The government has constituted a committee of secretaries under chairmanship of chief secretary J P Dange to look into the mattee, which submitted its report in the last week of April. R-Infra told the committee, government should direct Tata Power to continue to supply 500 Mw indefinitely as it claimed Tata Power’s generation capacity is build through equity contributed by Mumbai consumers and it is meant to be used for Mumbai consumers and should’nt be sold outside Mumbai. It also claimed,  Tata Power is wrongly interpreting the Supreme Court’s order which upheld MERC’s earlier order. The MERC had refused to give directives to Tata Power to sell power R-Infra as generation sector has been deregulated as per the provisions of the Electricity Act 2003.

Tata Power made a representation to the committee and conveyed its both inability and unwillingness to supply power to R-Infra. They informed the committee that out of 500 Mw it has contracted 100 Mw to the BEST which supplies power to island city.  Another 160 Mw it needs to cater 30,000 customers, who have switched from R-Infra and rest of the power it will require for additional customers who will switch from R-Infra during the course of year.

The subcommittee has been unanimous that MERC would be requested to immediately proceed with necessary steps under the various provisions of the Electricity Act, 2003, to ensure public interest is protected.

According to the statement from Tata ” The recommendation of the committee has been submitted to the Government of Maharashtra and the order from the government is awaited. In the meanwhile, government has requested Tata Power to please make 100 Mw available to BEST as per the PPA and maintain status quo with respect to the rest of the power. Tata Power has agreed to this request to maintain status quo till 3rd May 2010.”

The state government has a set up a highlevel commiitte to look into the dispute between the two rival power utilities. The commiitte had already submitted their recommendation to the government and the final order is awaited.

Reliance Infrastructure says Tata’s decision would lead to blackouts in the suburban region of Mumbai. The company also says the SC judgment is being interpreted incorrectly by Tata.