Tribunal sets aside MERC order against Maha Vitaran

MUMBAI: Maha Vitaran, the cash-starved state power distribution utility, has received a shot in the arm — the appellate tribunal for electricity has set aside the Maharashtra Electricity Regulatory Commission (MERC) order which would have made the power utility poorer by Rs 88 crore. The state regulator had held Maha Vitaran responsible for failing to submit its annual revenue return and tariff plan for the following year within a stipulated time-frame.

The MERC had set November 6 as the deadline for Maha Vitaran to submit next few years’ tariff projections. The utility, however, took an extra month and submitted the plan in December 2006. Unlike the prevailing practice where tariff projections are submitted on a year-on-year basis, the power utility was to submit multi-year tariff from this year.

The delay made the regulator prevent the power utility from collecting the difference if its tariff was fixed on higher side, and directed it to repay consumers and bear the loss in case of under recovery from them. The regulator didn’t find any merit in utility’s request to permit refund or recovery from the consumers based on the new tariff, as the case may be.

Miffed, Maha Vitaran challenged the regulator’s order before the appellate tribunal. Maha Vitaran pointed out that the MERC order, if followed, would have very severe impact on its commercial viability as it will be forced to bear the loss due to under recovery whereas in case of any over recovery, the same will have to be refunded. The tribunal, while setting aside the MERC order, directed it to reconsider Maha Vitaran’s proposal that will allow it to recover the amount denied to it.

Interestingly, the tribunal, in its order, observed that one-month delay in filing the petition would not have altered the tariff. It further noted that the Electricity Act, 2003, mandates safeguarding the interest of the consumers, but it also ensures recovery of the cost of electricity in a reasonable manner. “Since there is no additional burden on the consumers in this case, the order of MERC indicates misplaced sympathy towards them,” it clearly states.

This is the second major incident in the past few weeks where MERC orders have been set aside. The Supreme Court recently stayed an MERC order that asked Maha Vitaran to repay sundry charges it collects from consumers for new connections.