Regulatory body order on power tariff irks Govt.

By Mahesh Vijapurkar

MUMBAI, MAY 16. Though the recent tariff order of the Maharashtra Electricity Regulatory Commission (MERC) has enabled the State Electricity Board (MSEB) to bridge a gap of Rs. 691 crores, it has not been welcomed by either the Government or the power utility.

Senior political leaders in the State including Mr. Sharad Pawar, have criticised the order. The MERC is the first such body in the country to have issued an order for a State utility.

The Maharashtra Chief Minister, Mr. Vilasrao Deshmukh, startled at the MERC directives to the MSEB, spoke of ``winding up'' the MERC though it is not possible as the Commission was set up under a legislative enactment. It was constituted on August 5, 1999 and is headed by the former Chief Secretary, Mr. P. Subrahmanyam with Mr. Venkat Chary and Mr. Jayant Deo as members.

Mr. Deshmukh said at the recent Cabinet meeting that the Government should persuade the MSEB to challenge the order in the court.

Till now, the MSEB loss was covered either by the Government support or cross subsidy. If the MSEB fixed a tariff regime, it was done by the Government.

At the Government's behest hitherto, the power supplied to farmers was heavily cross-subsidised by taxing the industrial sector and domestic consumers. Now the MERC had asked the MSEB to ``earn higher amounts'' through ``efficiency improvements for which adequate scope exists''.

According to Mr. Pawar, the MERC had gone beyond the brief. But some in the Ministry did not like the Chief Minister's approach to unwillingly pay a political price in a liberalised regime.

The MERC has used the MSEB plea for a 18.9 per cent hike to earn additional revenue to force the power utility to do some revamp. It has, while allowing a third of the raise demanded, sought withdrawal of minimum charges, wanted all ``cross-subsidy to be eliminated gradually'' over a five-year period, and demanded that ``tariff for all categories be progressively increased or decreased as the case may be to reflect the average cost of supply''.

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Section  : Regional
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