MERC Suspends Order for Tariff Reduction in MahaVitaran
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Synopsis
On April 2, MERC suspended its recent decision to approve a 10% reduction in electricity tariffs for MahaVitaran, impacting 3.16 crore consumers who will continue paying previous rates. The commission has allowed Mahavitaran to file a review petition by the end of April, highlighting concerns over financial sustainability.
Key Takeaways
- MERC has temporarily halted the 10% tariff cut.
- Approximately 3.16 crore consumers will retain the previous tariff.
- MahaVitaran can submit a review petition by late April.
- Potential deficit of Rs 92,000 crore projected over five years.
- Concerns raised about the impact on various stakeholders.
Mumbai, April 2 (NationPress) The Maharashtra Electricity Regulatory Commission (MERC) has decided to stay its order that approved a 10 percent reduction in the electricity tariff charged by the Maharashtra State Electricity Distribution Company (MahaVitaran) for the fiscal year 2025-26.
This order, which was issued on March 28, was set to take effect from April 1. However, with the stay granted by MERC, approximately 3.16 crore electricity consumers of Mahavitaran will continue to pay the tariff applicable during the fiscal year 2024-25.
MERC has permitted Mahavitaran to submit a review petition by the end of April.
In its application, MahaVitaran requested MERC to stay its order, stating that the implementation would lead to a deficit of Rs 92,000 crore over the next five years compared to its anticipated revenue.
MERC, in its ruling on MahaVitaran's annual revenue requirements and tariff petition, had approved a 10 percent tariff reduction for FY 2025-26, along with a cumulative reduction of 16 percent by FY 2029-30 against the existing tariff (including Fuel Adjustment Cost). This was contrary to Mahavitaran's request for a 0 percent revision in FY 2025-26 and a 3.6 percent reduction by FY 2029-30. MERC had projected a revenue surplus of Rs 44,480 crore, while Mahavitaran anticipated a revenue deficit of Rs 48,066 crore.
Mahavitaran argued that the errors and inconsistencies in the tariff setting process for the 5th Control Period (FY 2025-26 to FY 2029-30) were fundamental.
If implemented as outlined in the Tariff Order, it would likely cause significant harm to various consumer categories and stakeholders, particularly the distribution licensee in Maharashtra.
Hence, Mahavitaran requested that the Tariff Order be immediately stayed to protect consumers and stakeholders.
The independent director of MahaVitaran, Vishwas Pathak, commented, “MERC today has stayed its order approving the reduction in the Mahavitaran’s tariff. MERC has also accepted our plea to file the review petition by the end of April.”
Sources from Mahavitaran indicated that if MERC had agreed to their tariff proposal, the company’s financial situation could have improved, allowing for a phased reduction in electricity tariffs over the next five years.
However, the MERC reduced tariffs for all consumers, even though Mahavitaran had recommended a tariff cut only for those consuming up to 100 units of electricity for the year 2025-26.
(Sanjay Jog can be contacted at sanjay.j@ians.in)
