BSES, the Reliance group's power subsidiary, has asked its customers to pay a security deposit equal to three times the last month's bills paid by them.

This has caused the Mumbai Grahak Panchayat to move the Maharashtra Electricity Regulatory Commission for an immediate stay on the issue.

BSES, Mumbai's largest electricity supplier, had sent letters to its consumers seeking the deposit, with the rider that the amount be paid within seven days. Non-payment of the deposit would result in discontinuation of power supply, the company said.

The company has offered to pay an interest of 5.5 per cent per annum on such deposits.

The power company had 20 lakh (2 million) customers in Mumbai, but the notice is being served to only those customers who are not maintaining such a security deposit.

BSES said that the deposit is to be used as a security against bad debts, and that this practice is being followed by BEST and the Maharashtra State Electricity Board as well.

Meanwhile, Dr Ashok Pendse -- who is representing Mumbai Grahak Panchayat – said: "We are confident that within the next few days, we will get positive reply from the MERC."

The MERC has the power to regulate the electricity tariff and other related issues, and its decision can only be challenged in the Supreme Court.

Pendse said that it is up to the MERC to decided on it. He, however, said that "there should be equal treatment for all suppliers."

The BSES said that the security deposit demand is legal and all customers are required to maintain such a deposit. This requirement has been spelt out in the company's 'Conditions of supply and miscellaneous charges' under clause 16 as per the Indian Electricity Act, 1910 which has been approved by the government of India.

"Electricity is a commodity wherein by its very value energy is sold first, and billed later. The payments are made thereafter. Thus even a defaulting consumer gets credit against payment of bills for at least three months. The deposit is used as a security against bad debts," the company said.