Maharashtra Electricity Regulatory Commission has allowed Reliance Infrastructure to recover accumulated earnings of over Rs 2000 crore from its consumers in Mumbai.
While the markets cheered the move, lakhs of Mumbaikars will have to shell out more in form of higher electricity bills.
The firm will garner around Rs 2316 crore as the MERC allowed the company to recover its accrued earnings or regulatory assets that were not yet collected because of several delayed regulatory processes and investigations in the last two years.
But in a latest order passed by the regulator, the MERC has allowed the company to recover its regulatory assets together with carrying cost at the rate of SBI's prime lending rate.
A cross Subsidy Surcharge will also be recovered from all the R-Infra consumers who migrated to Tata Power effective from the date of migration.
This surcharge is being levied as the migrated consumers continue to use Reliance Infra's distribution network.
And the recovery will be done in 3-5 years time although the mechanism to be used is still unclear.
RR Mehta from Reliance Infra told NDTV that MERC has recognised that gross subsidy has to be paid by the consumers who are using R Infra network and getting power supplies from the Tatas.
As investors cheered the news, R-Infra's stock closed posting a 2.76%.rise on the BSE today.
This definitely comes as bad news for the over 1.5 lakh consumers who migrated from R-Infra to Tata Power as they will now have to bear the additional cost.
Reacting to the decision, Ashok Pendse, a consumer activist said, "Let us assume I was a Reliance consumer who shifted to Tatas and got a differential of Rs 2. Now if all these surcharges put together add up to Rs 2 , then the question that comes to my mind is - why did I shift? "
The extent to which the consumers will see their electricity bills rising is still unknown as the mechanism for recovery is still to be fixed. But Mumbaikars should certainly brace for higher tariffs in the future.
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