Know tariff in advance

If things go according to plan, Mumbaiites will get fewer shocks from their electricity bills over the next five years.

The Maharashtra Electricity Regulatory Commission (MERC) is contemplating a five-year multi-year tariff (MYT) plan that will compel power distributors to provide information on tariff hikes planned over the next five years.

The MYT, if passed, will be implemented from April 2010 to March 2015.

Currently, power companies provide consumers with hike estimates for a year.

In 2007, MERC had introduced a 3-year MYT plan with a similar intention of providing information about the approximate hike in electricity tariffs. But the plan was a failure due to unprecedented increase in fuel prices, economic recession and the inability to estimate population growth in the city. Now the regulator is making a fresh attempt at persuading power companies to give an estimated band of power hikes, so that a consumer can budget for this increase.

“We are having detailed meetings with various consumer representatives, power companies and experts on how a 5-year MYT can be implemented in Mumbai. They will also submit a draft approach plan. This plan would help consumers become aware of the hike in electricity bills for coming years,” said V P Raja, chairman, MERC.

This move assumes significance in the wake of recent controversies over steep hikes in power tariff.

While consumers protested, power distribution companies said they had to buy additional power at higher rates due to spurt in demand. A 5-year MYT would compel power companies to project growth in demand for power, possible hikes in tariff expected for 5 years and the cut down in distribution losses and other expenses incurred by them over this period of time.

These projections would need MERC verification before being implemented.

Power experts believe that newer residential and commercial buildings, lack of proper infrastructure and old cables are
reasons why distribution companies failed to predict demand for MYT after the 2007 MERC order.

“The previous MYT failed but the methodology can be improved and this is what we are trying to do with the 5-year MYT,” said Ashok Pendse, representative of Thane Belapur Association and former member of Mumbai Grahak Panchayat.