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State utility to challenge power regulator’s order

State utility to challenge power regulator’s order

Mumbai: Maharashtra government-owned power distribution utility Mahavitaran will challenge the order of power regulator, Maharashtra Electricity Regulatory Commission or Merc to grant open access to Nagpur-based synthetic yarn company Indo Rama Synthetics (India) Ltd, said a Mahavitaran official.

Under the electricity Act customers with consumption of 1 megawatt (Mw) are allowed to source power directly from power generator or exchanges.

Indo Rama has already filed a contempt petition against Mahavitaran for not implementing the regulator’s 1 March order.

A Mahavitaran official said the regulator is allowing industrial customers who cross-subsidise domestic and agricultural consumers to migrate to open access system without levying cross-subsidisation surcharge, as prescribed under the law.

Due to higher level of tariffs for industrial and commercial consumers, Mahavitaran could collect additional revenue of Rs4603 crore in financial year 2009-10 and that money was utilised to cross-subsidise domestic consumers.

The high tension industrial consumer are charged Rs5.50 per unit and Rs1.25 is used for cross-subsidising other consumers.

Currently power is available at around Rs3.50 per unit on exchanges, making attractive to industrial consumers to go for open access as they avoid paying the cross-subsidy charge.

Barring Uttar Pradesh and Maharashtra, regulators from all other states have levied cross-subsidy charges on consumers who want to migrate to the open access system, said the official. The amount varies between 90 paisa to Rs3 per unit.

According to him, losing a customer whose consumption is 1 Mw leads to a revenue loss of around Rs60 crore per annum. Indo-Rama’s consumption is around 7 Mw.

Going by the Merc website, the regulator has received applications from customers with an aggregate consumption of around 850 MW wanting open access facility.

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