Maharashtra moots new plan to decide power tariff……..Rajshri Mehta
The uncertainty over tariff fluctuations every year will soon become a thing of the past. The Maharashtra Electricity Regulatory Commission (MERC) has proposed to replace the present method of determining annual tariff with a multi-year tariff (MYT) framework. A power company under MYT will be allowed to change its tariff provided it achieves a certain operational efficiency over a 5-year period.
According to MYT regulations, a power company has to submit a 5-year business plan that takes into account ways to reduce power distribution loss, project demand-supply scenario, power procurement plan and capital investments to generate power.
The next control period of five years is proposed between April 1, 2011 and March 31, 2016.Under the MYT system, if a company says it would reduce distribution loss by 2% but reduces only 1.5%, it would have to bear the loss of income and not transfer it to consumers by way of higher tariff. In the earlier annual tariff system, if a power company took no steps to improve its functioning like reducing distribution loss or set up a plant to meet future growth as per MERC rules, the company was assured a 16% returns on its equity.
“The objective of having a long-term plan is to ensure that load shedding is avoided to the extent practicable and the distribution licensees ensure that adequate capacity is contracted under long-term, medium-term, short-term contracts as appropriate at optimum prices. Also, to ensure that the consumers are supplied electricity on a 24×7 basis and the tariffs are reasonable and reduced in the long run,” said an MERC official.
The regulatory commission has sought public comments on the MYT regulations.
Power activist Ashok Pendse has welcomed the MYT. “This system is very good. It would help consumers — be it residential, commercial or industrial — plan their future electricity tariff.”
The decision is good news for energy intensive industries like steel and plastic toy manufacturers.