The Maharashtra Electricity Regulatory Commission has permitted the Maharashtra State Electricity Board to raise tariffs by an average of 1.5 per cent, netting an additional Rs 186 crore (Rs 1.86 billion) in revenue for this financial year. Farmers and domestic consumers will bear most of the additional burden.

In fact MSEB had sought a tariff hike of 12.5 per cent. This would have raised its revenue by Rs 1,462 crore (Rs 14.62 billion).

MERC has regulated the tariff increase in such a manner that the power bills of the cross- subsidised consumers of MSEB -- farmers and households -- who pay lower power tariffs will now go up by over four per cent.

 "For subsidised categories such as domestic, agriculture and low tension consumers, the tariff hike will be higher than four per cent. This is inevitable, as the MERC is mandated by the provisions of the Electricity Regulatory Commission's Act to move all tariffs towards the average cost of supply," the commission's order states.

As a result of the revised tariffs (effective from December 1, 2003) MSEB will net a revenue of Rs 4,072 crore (Rs 40.72 billion) for the last four months of the current fiscal year.

The MERC has not revised the reconnection charges, delayed payment charges, penalty for exceeding contract demand and sanctioned load and power factor penalty for LTP-G consumers who don't have instruments to measure the power factor.

Concurring with the suggestion made by the Mumbai Grahak Panchayat, a consumer representative, the MERC noted: "The MGP has suggested that if MSEB needed oxygen in the form of tariffs to recover the cost of the excess losses, consumers would be willing to contribute to this provided the commission treated this contribution as a regulatory liability (RLC) owed by the MSEB to the consumers as it is not MSEB's rightful revenue requirement. The commission is of the opinion that this interim measure may solve the current predicament. However, this is only an interim measure and not intended to replace the differential transmission and distribution loss charge mechanism."

The MERC has ratified transmission and distribution losses to the extent of 26.87 per cent as compared with the 36.62 per cent proposed by MSEB.

The RLC (the cost of additional power required on account of higher energy input requirement) is estimated to cost MSEB Rs 947 crore (Rs 9.47 billion) in the current fiscal year.

 "The average rate of contribution works out to Rs 0.50 per unit for the subsidising categories. In future when the T&D losses are reduced, the RLC will be returned to these consumer categories through reductions in tariffs," the commission directed.