Reliance Energy not to hike power tariff

MUMBAI: Succumbing to political pressure, Reliance Energy (REL) has decided not to proceed with the steep tariff increase that it had proposed for Mumbai consumers.

This means there will be no high bill for 2.5m electricity consumers of REL, who are located mainly in the suburbs. The company postponed the collection of additional energy charges (AECs) and will now approach the Maharashtra Electricity Regulatory Commission (MERC) to review the tariff increase order. “This is a major victory for the people.

The power tariff hike was unjust and unfair,” said Maharashtrra Navnirman Sena chief Raj Thackeray, reacting to the development. He had led a delegation to REL to request the company to defer the hike. He had warned of “people’s ire” should REL ignore popular sentiment.

“In the interest of millions of our consumers, we have decided to indefinitely postpone the collection of AEC from all our consumers and approach MERC for reviewing the order,” said an REL spokesperson.

To mitigate the hardship of consumers, the company had last week extended deadline for paying the additional energy charges from six months to 18 months. Due to this decision, the AEC was reduced to Rs 0.32 per unit per month for 18 months from Rs 0.97 for six months as prescribed by MERC order.

The Appellate Tribunal of electricity (ATE) had approved the recovery of the amount. Subsequently, MERC had ordered the collection of amount in six months from all consumers. The annual revenue requirements (ARR) of the generation, transmission and distribution of REL stand at Rs 691 crore, Rs 36 crore, and Rs 2902 crore, respectively.

According to the MERC order, REL consumers will have to pay 40% to 66% more for a period of six months beginning from October ’06.

The effective average tariff increase suggested by MERC for REL consumers was 7.5%. In the residential category, the tariff has been raised by 40-66%, while for the low tension (LT) commercial category the increase was 24-27%. And high tension (HT) industrial section, consuming 2,50,000 units, will be charged 17% more.