BSES, TEC lock horns over power supply

TEC has a license to distribute power to bulk consumers in Mumbai including BSES, Railways and BEST at the rate of around Rs 2.47 per unit. BSES, in turn, supplies power to all consumers in Mumbai. But the supply of power by TEC to BSES dwindled after BSES set up its own plant. Sale to BSES (in unit terms)accounted for 33 per cent of units sold by TEC compared to 38 per cent in 1996-97.

TEC is, therefore, scouting for consumers to sell power directly to them, a move opposed by BSES which considers it as poaching in its territory. While BSES is supplying power to Mumbai from its 250 mw Dahanu plant and is setting up another 500 mw plant at Palghar, TEC is evacuating power from its Trombay and Bhivpuri unit.

Another bone of contention between the two power producers is the standby charges which BSES is paying to TEC. While TEC is paying around Rs 363 crore to Maharashtra State Electricity Board (MSEB) for its 500 mw unit, BSES is paying only Rs 42 crore to TEC for its 250 mw unit. “It is unfair that we should pay such high charges while BSES is paying so less to us… this is despite the fact that BSES has surplus,” say TEC officials. Standby charges are paid when a company closes its plant for maintenance and buys power from an another company.

As TEC’s plants are old and depreciated, the companyproduces power at a comparatively cheaper rate than BSES and other new entrants. Though TEC is also selling power to MSEB, there has been no consolidated agreement yet. Due to erratic demand in the power industry, during 1997-98 TEC, comprising of Tata Power, Andhra Valley and Tata Hydro Electric, sold only 8,966 million units of electricity, down from 9,152 million units in the previous year.

Faced with the prospects of excess production, TEC has now urged the MSEB to enter into a long term power purchase agreement with it. MSEB has, however, said that it will negotiate price with TEC in the line of other PPAs which the board has signed with other power producers. This means all issues such as the amount of power, the condition of plant and the fuel used for generation should be considered in the negotiations.

MSEB pays around Rs 1.80 per unit when it buys surplus power from TEC. If the latter wants a long term power purchase agreement, the price needs to be suitably negotiated. MSEB has a set of normsfor purchase of surplus power and it would not like to pay extra.