UPDATE: The Appellate Tribunal for Electricity has passed an order putting this price increase on hold. The tribunal has also set the date of 5th August 2013 to hear the matter and to reach the final conclusion. Thus, until a final conclusion is reached, the old prices apply. Our Calculator has been updated to reflect this change.
The Tribunal has said that a stay is needed as consumers who have been impacted were not given an opportunity to present their case. This is a good win for consumer rights.
Further update: Tata Power’s prices have increased in other areas besides the cross subsidy surcharge See our post on New prices for Tata Power.
MERC has issued a new order last month that has an immediate impact on customers who switched from Reliance Energy to Tata Power. MERC has ordered that such customers need to pay a cross subsidy charge for any consumption that exceeds 300 units. The rationale is that the high consumption customers (presumed richer) should subsidize the low consumption customers (presumed poorer) and therefore have a higher price. This is also reflected the electricity tariff which has a lower per unit cost for lower consumption. Reliance Energy has argued that customers with higher consumption have migrated to Tata Power and they should continue to pay to subsidise the customers with lower consumption on Reliance network. MERC has agreed and ordered a cross subsidy charge.
In other words, Reliance has asked for money from customers who have switched to Tata Power and MERC has agreed. So, there is an addition in Tata Power bill but the money goes to Reliance Energy.
Earlier we reported that Tata Power had proposed an increase in its tariff for Mumbai customers. This was submitted to MERC which announced a public hearing to decide on the issue. It was held today and we attended it to get a sense of the possible outcomes. In summary, there is good news for customers. Read on for more details.
See further update on this here.
A lot of our customers have been asking us about an impending increase in prices at Tata Power. Some of them refer to the news about a new cross subsidy charge being added to consumers who have moved from Reliance Energy to Tata Power. On the other hand, most people do not know about other price increases that have already happened. So, here is a post summarising the current situation after a detailed study of the actual orders running into hundreds of pages.
First, Reliance Energy wants to charge a “cross subsidy charge” on Tata Power customers that used to be Reliance Energy customers. Tata Power has argued that these customers are not Reliance Energy customers any more and therefore should not be charged by Reliance Energy anymore. The regulator MERC sided with Reliance in an order dating July 2011 (that is a year and half ago). Tata Power appealed against it to Appellate Tribunal for Electricity (ATE). This appeal has again been decided in favour of Reliance. Tata Power can further appeal against it in which case it may take another year or so before a final decision is reached. Even if it doesn’t, MERC will have to decide the exact quantum of the charge before customers start paying and this will also take some time. Therefore, the change in price has not been implemented yet.