After Tata Power, consumer group objects to Reliance Infra tariff proposal

Close on the heels of Tata Power objecting to Reliance Infra's multi-year tariff proposal, Prayas, a consumer interest group based in Pune has also raised objections.

In its submission to the MERC (Maharashtra Electricity Regulatory Commission), Prayas has charged that Reliance Infra (RInfra) has proposed a higher level of distribution loss in the multi-year tariff proposal petition in comparison with what it had proposed under the business plan and which has also been approved by the Commission.

The group, which is an non-governmental organisation that caters to energy among other themes, has stated that the proposal has significant deviations from the business format that was approved by MERC in November 2012. It has formally filed an objection to MERC on the RInfra multi-year tariff petition.

In its note to the Commission, which is with

Business Line , Prayas has said the multi-year tariff petition has sought an approval of more than Rs 4,300 crore cumulative over the period of FY 12-13 to FY 15-16, above what was approved by MERC. The group has noted that the petition was submitted within six months of the business format approval, and has questioned the delay.

Stating that the operation and maintenance (O&M) costs estimated under the multi-year tariff petition are almost double of those approved under the business plan order, Prayas has alleged such large-scale deviation renders the entire business plan approval process meaningless and cannot be allowed.

With regards to the power generation from the Dahanu station, the group has held there is a sharp increase in capital cost for the control period vis-à-vis what has been approved. Overall, there is a difference of around Rs 250 crore between the power purchase expense under this head, as stated in the business plan and under the multi-year tariff petition, the note adds.

The group has also pointed out to the steep increase in capital expenditure and capitalisation costs, as also alluded to the improper treatment of regulatory assets.

The note to the Commission states, RInfra claimed revised cumulative revenue gap/regulatory asset of Rs 2,661 crore upto FY 11-12, as against the Commission approved figure of Rs 1,831.02 crore. Under the present multi-year tariff petition, the note adds, the petitioner has treated the regulatory asset at par with capital expenditure claiming 16 per cent return on 70 per cent portion considered as equity.