MSEDCL’s tariff proposal for 2009-10 is ‘inflated’: Prayas

According to the report prepared by Prayas,“the MSEDCL has sought a tariff revision of Rs 9,578 crore for the financial year 2009-10. Around 40 per cent of this projected revenue gap is on account of MSEDCL’s past and additional claims and truing-up claims. Another 36 per cent is on account of ‘estimated impacts’ of the state-owned power generation and power transmission utilities. Thus,it can be seen that the MSEDCL actually needs only Rs 2,435 crore,which implies tariff increase of only 9.30 per cent to meet its revenue requirement for 2009-10 as against Rs 9,578 crore,which implied a tariff increase of 36.6 per cent as projected in the petition. Thus revenue requirement has been inflated by almost four times than what is needed.”

Prayas goes on to explicate the reasons behind this inflated projections by the MSEDCL. “Incorrect accounting of revenue,failure in controlling the distribution loss reduction from 4 per cent to one per cent against the directive of the Maharashtra Electricity Regulatory Commission (MERC),projecting less power purchase from Mahagenco (which is cheap) and more from traders at an exorbitant rate of Rs nine per unit,indiscriminate increase in various controllable parameters such as operations and maintenance (O&M) costs and capital expenditure (capex) related cost,’ are some of the reasons for these inflated projections.

The NGO has given several instances of MSEDCL’s miscalculations. One of them says: “Currently,the zero-load shedding model is being implemented in Pune (Urban),Thane and Vashi circles and the revenue generated from these circles by way of the additional charge amounts to Rs 290 crore. However,the MSEDCL has not considered this revenue in its proposal. This error leads to inflated tariff increase requirement by Rs 290 crore.”

Prayas has blamed the MSEDCL for such miscalculations: “Time and again the MSEDCL has resorted to such tactics of making high estimates of revenue requirement and thereby creating panic in consumers. The commission should take serious measures to discourage the MSEDCL from this practice.”

A public hearing on the tariff proposal will be held at the Council Hall in Pune on June 29 at 11 am.