MERC slashes power tariff, 5% relief to households
   Date :31-Mar-2020

Maharashtra Electricity R
 
 
Staff Reporter :
 
Industrial sector gets power boost with cuts in range of 10 to 15 per cent 
 
Keeping in mind the troubled times in society due to COVID-19, Maharashtra Electricity Regulatory Commission (MERC) released multi-year tariff for Maharashtra, provided soothing balm through concessions to all sectors, including five per cent to residential consumers. For the industrial and commercial sector that would be most stressed due to coronavirus pandemic, the regulator has provided relief in range of 10 to 15 per cent for the next financial year 2020-21. On an average the relief translates into 8 per cent over next five years for all the sectors.
 
At the same time, MERC importantly announced moratorium on fixed charges, it was proving to quite taxing for consumers, for next three billing cycles w.e.f March 25, 2020. MERC on Monday notified the new tariff wherein Anand Kulkarni, Chairperson, claimed that on average the relief to all sectors in Maharashtra is in the range of 5 to 8 per cent over next five-year. Underlining the critical phase that country is passing through, Kulkarni said the situation today is volatile and desperate times call for desperate solutions and hence MERC thoughtfully tried to balance the expectations of MSEDCL and also sense need on the ground. Particularly for industrial sector the concession would be around 10 to 12 per cent and for household about 5 to 7 per cent.
 
The agriculture sector too has been given relief upto 1 per cent in the tariff. These concessions provided in view of COVID-19 are quite deep and not provided during last 10-15 years, the Commission has noted. Although the concession in tariff are meant for next financial year, Kulkarni said the in built mechanism finalised by MERC would ensure that relief is carried forward owing to flat tariff for next four years during the multi-year control period till 2024-25. State Government too would not be burdened nor power distribution companies expansion programmes get hit. The concessions provided to industrial sector would ensure they cash on the incentive and aid the Government in putting back economy on track.
 
FAC stabilisation fund for MSEDCL of Rs. 1500 crores MAHARASHTRA State Electricity Distribution Company Limited (MSEDCL) was directed to created Fuel Adjustment Charge (FAC) stabilisation fund limited to Rs. 1500 crore. MERC in its order said that the fund would address the possible variation in power purchase costs on account of FAC. The fund would be created through the additional amount approved by way of year on year 3 per cent escalation of the fuel cost. While initial FAC amount would be obviously negative as it will not be passed on to the consumer but will be used to build this fund. Subsequently, in case of unexpected rise, the amounts available in this fund will be utilised first and only the shortfall will be passed on as FAC. This fund is proposed to be used for purpose of tariff stability.
 Prepaid meters for agri sector made compulsory IN A bid to end practice of average billing of agriculture consumers, MERC has mandated prepaid meters under capital HVDS scheme. With very high reliability and improved quality of supply, the Commission expects 100 per cent recovery from these consumers. Further to improve upon Collection Efficiency, an important financial performance parameter for distribution business, the Commission has provided a trajectory in accordance with Regulation 23.3 of MYT Regulations 2019 for improvement of collection efficiency and reduction in arrears/receivable from beneficiaries/consumer. In case, MSEDCL fails to achieve above targets, the Commission may reduce 1 per cent from admissible Return on equity (RoE) of Supply Business and if collection efficiency improves 1 per cent more than the target specified above, MSEDCL would be getting 1 per cent more RoE on Supply Business over and above their entitlement.
 Major relief for rooftop solar power sector MERC has also addressed concerns of rooftop solar users and accordingly rejected contention of MSEDCL for grid support charge till 2000 MW capacity is reached in Maharashtra. Though noting that grid support charges are necessary to avoid additional tariff burden on the non solar consumers, Commission said it is using its inherent powers to further promote Solar Rooftop. Till the cumulative Rooftop PV capacity in Maharashtra reaches 2000 MW, no grid support charges would be levied thus settling the fear in the industry. At the same time the excess generated energy flowing into grid, the Commission approved a banking charge in kind in the form of energy adjustment, which would be 7.5 per cent for HT and 12 per cent for LT of the energy being banked in the grid. However, additional fixed charges on behind the meter Rooftop PV is exempted and the focus would be to register such installation primarily for grid security.
MSEDCL has surplus of Rs 22,242 cr THE Commission has restated distribution loss of MSEDCL for FY 2018-19 to 20.54 per cent. Further as ruled in MTR Order, the Commission has also restated Agricultural sales from FY 2014-15. During 4th Control period, the Commission has set out target of reduction in Distribution loss trajectory from current level of 20.54% (FY 2018-19) to 18% (FY 2020-21) and up to 12% (FY 2024-25). Similarly, MERC has rejected contention of MSEDCL about its revenue gap of Rs. 60,313 crores, about 13 per cent of total projected ARR, and determined that there is surplus revenue of Rs. 22,242 crores after inclusion of earnings from FAC. 
 
Wheeling charges abolished for public transport For high voltage power users, namely Railways, Metro, Monorail and other consumers taking supply on EHV (110/132 kV) voltage level, the MERC has abolished wheeling charges. The abolition of wheeling charges is likely to benefit Railways as it is drawing its requirement from Dabhol plant and other States where they are getting competitive tariff as compared to MSEDCL. 
 
Categories, slabs re-organised To rationalise the tariff structure, Commission has reduced number of categories and slabs by merging similarly placed consumer categories. It however took care that existing consumers are not significantly impacted due to spike in traffic. Accordingly, Advertisement & Hoardings and Temporary Supply (Others) are merged with the Commercial Category. Temporary Supply (Religious) and Crematorium & Burial Grounds are now one with the Residential category. The intra-category consumption slabs of (0 to 200 units and above 200 units) for consumers under LTCommercial and LT-Public Service categories with load below 20 kW. Care was taken that with merger the consumers do not face a tariff shock. In furtherance of tariff category rationalisation, LTIndustry (General) and LTIndustry (Powerloom) subcategories are merged however but has allowed discount of 2.5 per cent on Energy Charge (including FAC, if applicable) to LTPower Looms.
 
Big industries stand to benefit with rate cut MERC has also introduced Bulk Supply Discount at rate of 2 per cent to 1 per cent on energy charge including FAC (with reverse telescopic features for all HT-Industrial consumers with consumption in excess of 1 lakh units per month). To further encourage industrial consumption and sourcing of power from MSEDCL, a concept of Incremental Consumption Rebate of Rs 0.75/kVAh has also been introduced, which will help the consumer to further reduce their effective tariff. For bulk consumers this is an attractive offer and ensures their concerns were addressed by Commission. The increase in fixed charges is offset by incentives in tariff to the consumers. Further to encourage industrial consumers to continue drawing power from MSEDCL, the Commissioner introduced a concept of incremental consumption rebate of Rs. 0.75/kVAh, that will further lower the tariff.