TOI: Court allows consumers to choose your power supplier just like you do with phones: July 09, 08

SC SIGNALS POWER PLAY

Court Lets You Pick And Choose Your Power Supplier Just Like You Do With Phones; But Change On Ground Will Take Time ………..Devraj Dasgupta | TNN

Mumbai: Tuesday’s Supreme Court order on power supply allows Tata Power Company (TPC) to offer electricity to both retail and bulk consumers across Mumbai. This ends the monopoly of Reliance Energy Limited in the suburbs and BEST in the island city in power supply and allows consumers to choose their electricity supplier just like they do with their cellphone service-providers.

But experts say the judgement does not automatically imply that Mumbaikars can choose between power utilities right away. There are several infrastructure, regulatory and cost issues that will have to be addressed by TPC before it starts selling power directly to the consumer.

Mumbai Grahak Panchayat president Ashok Pendse said it was good that there would be competition for supplying power. “The court’s sentiment is to allow consumers a choice and so it is welcome,’’ he said.

But Pendse pointed out that TPC would have to offer power to retail consumers all over Mumbai without any prejudice.

“They cannot pick and choose retail consumers in certain parts of Mumbai. It will be bound by Universal Service Obligations (USO) that mandate supply to every consumer asking for a connection,’’ he said.

But TPC, he said, could roll out its supply in phases. “It can always identify one area, Saki Naka or Andheri for example, and offer electricity to anyone opting for its service,’’ he added.

Maharashtra Electricity Regulatory Comission (MERC) officials said TPC would have to present a detailed roll-out plan to the regulator before starting supply.

Power sector experts said TPC could also use the REL network to supply power to retail consumers in the suburbs by paying “wheeling charges’’ under the Open-Access Policy.
But it will not be able to use the BEST network in the island city as Open-Access Policy is not applicable in areas served by government undertakings.

So TPC will have to spend a huge sum to lay infrastructure in the island city.

REL director Lalit Jalan welcomed competition and said REL would not mind lending its network to TPC in lieu of wheeling charges. “But TPC’s tariff will be higher than ours after taking into account distribution losses and wheeling charges. So, at some point, it will have to lay its own infrastructure which, in turn, will entail massive expenditure,’’ he said.

Besides, TPC did not have too much spare power to directly supply to retail consumers after giving power to bulk consumers.

BEST additional general manager (electricity) S A Puranik said BEST was not worried by TPC’s entry into retail supply because it already had an agreement with the latter to buy 800 MW for next 10 years.

CITY LIGHTS

Three agencies, Tata Power Company, BEST and Reliance Energy Limited, play a key role in lighting up your homes, offices and factories

BEST

BEST supplies power to the island city, from Colaba in the south to Sion and Mahim in the north.
It lights up the homes and offices of 9.5 lakh consumers, supplying a total of 865 MW of power.

REL

Reliance Energy Limited supplies power to the suburbs, from Bandra to Dahisar in the west and from GTB to Deonar in the east and GTB to Kanjurmarg in the central suburbs. 25 lakh consumers depend on REL for electricity at their homes and offices; REL has to supply 1,470 MW of power to meet this demand.

TPC

Tata Power Company supplies power to bulk consumers like the railways, the mills, BARC, Bandra-Kurla Complex and the big oil refineries.
It has to supply 477 MW of power daily for this purpose.

THE GENERATORS

Only two of the three suppliers, TPC and REL, generate power; TPC generates 1,777 MW daily, REL 500 MW. But the total daily demand is 2,800 MW (June 2008); the gap between demand and generation is made up by buying power from external sources.

THE NEW EQUATION MADE EASY

What does it mean for you?

It means that you will, for the first time, get a chance to choose your power supplier irrespective of your address in Mumbai. The situation will be quite similar to a telecom circle with multiple players offering the same service at competitive rates. The Supreme Court order puts an end to the monopoly in electricity supply, which BEST and REL have been enjoying in the island city and the suburbs, respectively.

Can you shift immediately out of the BEST or REL loop (if you are, for any reason, not satisfied with its service) and avail of supply from TPC?

No, you cannot make the shift immediately. TPC will have to come out with a detailed tariff plan that has to be approved by the Maharashtra Electricity Regulatory Comission (MERC). There are other problems as well. TPC does not have the distribution network to take power directly to homes, offices and factories although it can use the REL and BEST networks by paying ‘wheeling charges’. But TPC will still need recieving stations, sub-stations, its own transformers and last-mile metered connections to housing societies and office complexes.

What will be the next course of action for your current power suppliers, REL and BEST?

Well, for one, they can improve services to the point that not a single consumer will look for an alternative supplier. REL and BEST have the advantage of being existing utilities and have the supply infrastructure in place. It is much easier to add to existing network than to start from scratch. But they will also have to control expenses and try to procure cheap power to retain consumers.

URL: http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JTS8yMDA4LzA3LzA5I0FyMDA0MDA=&Mode=HTML&Locale=english-skin-custom

Consumers feel empowered with switch-over option …………Viju B | TNN

Mumbai: Neelima Sethi runs a small-scale embroidery shop near Dahisar. Her staff work in shifts and they need 24×7 power inside their brightly-lit workshop. “I pay a bill of Rs 15,000 every day and, during the lean period, it eats into my profits,’’ she says.

But the Supreme Court verdict on Tata Power Company, she feels rightly or wrongly, may bring about a change in the tariff structure. And that, she says, will definitely come as a huge relief for her — and others like her — in the near future.

“I see a ray of hope because, if there is one more power utility that promises to provide decent service, I have an option of switching over. This competition will be good for consumers,’’ Sethi said on Tuesday.

TOI spoke to a cross-section of consumers, consumer-right activists and power experts on the issue on Tuesday and all of them agreed that that the Supreme Court verdict could only have a positive impact on the power sector and pricing in the long run. Experts, however, also advised caution in the midst of the euphoria as the switch-over option might not be available immediately.

“This is good news for the 2000-odd small-scale industrial units within BMC limits. We feel that tariff will definitely come down in the long run as there will be no monopoly in distribution of power now,’’ Bombay Small-Scale Industries Association president Rakshpal Abrol said.

“The Tatas already have power licences and they have a track record of efficiency. The existing power utilities will now be forced to better their services and this again is good for consumers,’’ Abrol said.

NGOs like the Parayas Energy Group, which are in the forefront of the fight for power reforms and conservation, also agree that the tariff may come down. “But a lot depends on the Maharashtra Electricity Regulatory Commission and the tariff structure it proposes,’’ Prayas consultant Shantanu Dikshit said. This is the first time that the country will see private power operators vying for a share of the same pie.

“This is going to be extremely beneficial for consumers,’’ he added.

Consumer activists have welcomed the development but are still wary. “We have to see that they do not hike the exit and entry charges when consumers switch over from one utility to another. There should be more flexiblity so that consumers can shift from one provider to another without any restriction,’’ consumer activist Rajesh Darak said.

THE CASE SO FAR

October 2004:

Reliance Energy Ltd, which supplies power to the suburbs, approaches state regulator MERC and challenges Tata Power Company’s authority to supply power directly to retail consumers. MERC observes that TPC’s licence condition clearly indicates its duty to meet the demand of bulk users like railways besides distribution utilities like BEST and REL. But, though it is not obliged to supply power to consumers using less than 1 MW, it can do so if it has excess power.

May 2006:

REL, unhappy with the MERC’s order, goes to the Appellate Tribunal for Electricity (ATE) in Delhi. The tribunal says TPC is supposed to sell power only to distribution utilities and not even to bulk users. The tribunal’s order means that TPC has supplied power to railways, mills, the BARC and refineries since the last 75 years illegally. TPC, stumped by the order, rushes to the Supreme Court.

July 2008:

Supreme Court says TPC can supply power to consumers irrespective of consumption limits; TPC can supply power even to retail consumers, besides existing bulk users.

URL: http://epaper.timesofindia.com/Repository/ml.asp?Ref=VE9JTS8yMDA4LzA3LzA5I0FyMDA0MDE=&Mode=HTML&Locale=english-skin-custom