In a landmark order, the Maharashtra Electricity Regulatory Commission has introduced incentives for industrial customers of the Maharashtra State Electricity Board.

The regulator felt that the state power utility is facing the threat of losing these consumers to captive power companies due to the provisions of the Electricity Act 2003.

Under the provisions of the Act, companies can sell surplus power from their captive power plants to third parties without the sanction of the state electricity boards (SEBs) as was earlier required.

The state electricity boards will also have to allow the captive power companies to use their transmission lines subject to the availability of the facility.

"The commission is of the opinion that the MSEB faces a threat from movement of consumers having very high consumption to captive generation, under the provisions of the Electricity Act 2003. In order to incentivise such high-consumption consumers who also contribute a steady load to the MSEB system, the commission has introduced a load factor incentive to consumers having a load factor above 75 per cent based on contract demand," the power regulator has said in its recent tariff order passed for the 2003-04.

This comes into effect from December 1, 2003.

The commission has introduced a load factor incentive for two slabs of consumers. The first is for consumers with load factors between 75 per cent and 85 per cent.

They will be entitled to a rebate of 0.75 per cent on the energy charges for every percentage point increase in load factor (from 75 per cent to 85 per cent).

The second is for consumers with a load factor of over 85 per cent. They will be entitled to a rebate of one per cent on the energy charges for every percentage point increase.

The total rebate under this head will, however, be subject to a ceiling of 15 per cent of the energy charges of the consumer.

Also, the commission has added the rider that the rebate is available only to those companies which have no arrears with the state electricity board.

The move by the regulator to protect the MSEB is even more significant since the state electricity boards traditionally charge a higher tariff to industrial customers to cross-subsidise the domestic and agricultural customers.

The power regulator's order is aimed at helping the MSEB to retain its customers.