Retailers to petition against tariff hike

Retailers to petition against tariff hike

Faced with mounting electricity bills, organized retailers in the state plan to petition the Maharashtra Electricity Regulatory Commission to reduce recently doubled power tariffs. Representatives of major retailers, including Pantaloon Retail India Ltd, Shoppers’ Stop Ltd and Inorbit Malls Pvt. Ltd, attended a meeting on Saturday and decided to oppose new power charges.

The cost of power for malls and multiplexes nearly doubled to Rs8.50 per unit from Rs4.50 per unit from 1 May as the state faced a 30% shortage in power supply. Faced with a 6,700MW shortage, the state’s electricity regulatory commission zeroed in on malls and multiplexes, creating a new category with the highest power charges for them. As a result, power charges have more than doubled over the last two months, affecting business for most retailers.

“I don’t understand why retail is not seen as a public utility. Why this discrimination against us?" asks Kishore Biyani, managing director, Pantaloon Retail. “We are part of urban infrastructure and this is killing our business. I don’t see why consumption is being targeted."

The power tariff hike came even as many retailers undertook power saving measures this summer. Malls scaled back on the amount of air conditioning, stayed dimly lit, and multiplexes cut back on number of movie shows.

While organized retail is growing at around 40% a year, according to some estimates, rising real estate costs, service costs and power costs are affecting margins for retailers, says Gibson Vedmani, chief executive of the Retailers Association of India, the industry body which organized the meeting. The cost of power in Maharashtra has gone up more than three times in four years to Rs8.50 per unit from Rs2.50 per unit in 2003, according to the Association.

But regulators maintain that new structures, such as malls and multiplexes, were using more power because of their high use of display lighting and air conditioning, thus accentuating the state’s power crisis.

“The malls are power guzzlers...we are giving a clear signal to reduce their consumption," said Pramod Deo, chairman of the electricity Commission, shortly after upping power rates for malls and multiplexes, in April.