Synopsis
From April 1, 2025, Mahavitaran consumers will see a significant reduction in power tariffs, with a 10% decrease approved by the Maharashtra Electricity Regulatory Commission, leading to lower bills for millions of households and industries alike over the next five years.Key Takeaways
- 10% reduction in tariffs approved by MERC.
- Effective from April 1, 2025.
- Residential consumers to benefit from 10-12% overall tariff reduction.
- Time-of-day rebate for solar consumption.
- Support for Data Centers and semiconductor units.
Mumbai, March 29 (NationPress) Approximately 3.16 crore customers of the Maharashtra State Electricity Distribution Company Limited (MSEDCL), also known as Mahavitaran, will experience a reduction in their electricity tariffs from 2025-26 to 2029-30. The Maharashtra Electricity Regulatory Commission (MERC) has sanctioned a 10 percent decrease in tariffs for FY 2025-26 and an overall 16 percent reduction by FY 2029-30 compared to the current tariffs (including Fuel Adjustment Cost). This decision is in contrast to Mahavitaran's proposal for a 0 percent change in FY 2025-26 and a 3.6 percent reduction by FY 2029-30.
The tariff reduction is backed by a projected revenue surplus of Rs 44,481 crore, which has contributed to an overall decrease in the average cost of supply.
The MERC's decision was made following Mahavitaran's multi-year tariff petition, with the updated tariffs set to take effect on April 1.
The overall tariff reductions for residential consumers across all slabs are anticipated to be between 10-12 percent.
For residential customers consuming between 1-100 units, the tariff will drop by approximately 24 percent by FY 2029-30.
Moreover, the MERC has implemented a time-of-day (ToD) rebate ranging from Rs 0.80 to 1.00/kWh for residential users consuming electricity during solar hours (from 9 am to 5 pm). The MERC has also approved a revenue surplus of Rs 44,480 crore, contrasting Mahavitaran's estimate of a revenue gap of Rs 48,066 crore.
Industrial consumers will also benefit, as the MERC has lowered the Cross Subsidy rates for high-tension (HT) and low-tension (LT) industries. The Cross Subsidy for HT Industry has been reduced from 113 percent to 101 percent, and for LT Industry, from 108 percent to 100 percent, aligning with the average cost of supply (ACoS) over the specified period.
As a result of the tariff reduction approved, the average price of electricity for HT Industry is expected to decrease by approximately 15 percent, while for LT Industry, the reduction is around 11 percent for FY 2025-26. By the conclusion of the fifth control period (2029-2030), the HT Industry tariff will further decline at an annualized rate of 4 percent, and LT Industry will see a 3 percent annualized decrease.
The MERC has also classified high-priority sectors such as Data Centers and semiconductor facilities under the Industrial category, allowing them to enjoy these benefits to lower their power purchase costs. To incentivize the use of 100 percent Green Energy, whether through open access or Green Tariff, the MERC has approved a 10 percent discount on Wheeling Charges for Data Centers and semiconductor units, which aims to attract more such facilities to Maharashtra.
This order from the MERC coincides with Chief Minister Devendra Fadnavis's announcement that Maharashtra has become the data capital of India. The state government has recently launched a comprehensive data policy.
To promote tourism, the MERC has categorized Hotels, Resorts, and Guest Houses with lodging facilities under the Industrial Tariff Category, significantly reducing their tariff rates.
This change will substantially lower electricity bills for Hotels, Resorts, and Guest Houses, which were previously categorized as Commercial. The MERC has proposed specific zones with additional discounts on energy charges: 25 Paise/unit for B-Zone, 50 Paise/unit for C-Zone, and 75 Paise/unit for D-Zone, depending on the hotel's location.
The MERC has introduced a single-part tariff for the electric vehicle (EV) category (both HT and LT) and eliminated Fixed/Demand Charges, following the Ministry of Power Guidelines.
To encourage EV usage, the tariff is slightly below the ACoS, and ToD benefits will also apply. The removal of Fixed/Demand Charges will result in an 8-10 percent reduction in the existing EV tariff. The MERC has maintained a lower tariff (discount/rebate) of 2.5 percent in Energy Charges for Powerloom, compared to the approved Energy Charge under LT Industry.
Powerloom consumers will also benefit from an incremental consumption rebate of Rs 0.75/kWh for specific LT categories.
For the HT Commercial Category, the Cross Subsidy has been reduced from 174 percent to 127 percent, and for the LT Commercial Category, it has been lowered from 151 percent to 130 percent during FY 2025-26. The tariff for the HT Commercial category is expected to drop by around 30 percent, and for the LT Commercial category, it will decrease by approximately 20 percent. The Commercial category's tariff remains above the ACoS.
Agricultural consumers will receive a subsidized tariff with a ratio of average billing rate (ABR) to ACoS of only 57 percent. With the solarization of agricultural feeders, the cost of supplying power to agriculture is expected to decrease over time.
In rationalizing sub-categories and tariff slabs, the MERC has merged the Public Service (Government) applicable to educational institutions and hospitals with Public Service (Others) to create a single category with uniform tariffs (Fixed Charge and Energy Charge) across both HT and LT voltages.
Lokesh Chandra, the chairman and managing director of Mahavitaran, remarked in a recent interview with IANS that this is the first time in Mahavitaran's history that tariffs have been reduced.
Conversely, Mahavitaran's independent director Vishwas Pathak noted that the tariff reduction is a result of the Chief Minister's Solar Agriculture Feeder Project 2.0. The solar power initiatives expected to launch in two years will supply electricity to farmers and also benefit residential and industrial consumers.
(Sanjay Jog can be contacted at sanjay.j@ians.in)
