MSEDCL passed on Rs 1,300-crore benefit to consumers

FAC — an amount that discoms apply on bills based on the varying price of fuel or coal — is chargeable per unit of electricity consumed. With the varying prices of fuel, the FAC on electricity bills varies, too.

IN the past one year, the Maharashtra State Electricity Distribution Company Ltd (MSEDCL) has refunded around Rs 1,300 crore to customers by passing on a negative Fuel Adjustment Charge (FAC). FAC — an amount that discoms apply on bills based on the varying price of fuel or coal — is chargeable per unit of electricity consumed. With the varying prices of fuel, the FAC on electricity bills varies, too. While mostly the FAC component is positive, when the fuel prices are high, in 2017-18 the discom was able to adjust negative FAC on electricity bills.

A senior official from the discom said: “This does not mean that fuel prices were low. Fuel prices are variable and compared to the overall cost of purchase of power, the amount of negative FAC is a small proportion. However, we were able to immediately pass on the benefit to the consumers.”

The negative FAC was despite an acute shortage of coal last year when prices soared. “It was a proper management of our variable components in the price that has helped us cut down on the FAC,” said the official.

In past years, the discom has been facing a deficit in coal supply. In June 2017, when electricity demand peaked, the discom was forced to carry out load-shedding in different parts of the state owing to a shortage of power. The situation continued until December. However, official sources said the situation has not improved much.

“Currently, we have just enough coal to sustain the plants. The price of power on the exchange has started to peak because of a shortage of coal,” said an official from MSEDCL.

Following last year’s debacle, MSEDCL claims to be better prepared this year. To keep costs to a minimum, the discom has signed short-term power purchase agreements with generators to buy power at lower costs as and when there is a requirement. This could keep the FAC under check and have limited effect on consumers.

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