Tata Power Approaches Appellate Authority To Stay Tariffs To Prevent Loss Of Customers

Tata Power Co. has approached the appellate authority for electricity to put a stay on the multi-year tariff for FY24 and FY25 to prevent the immediate loss of customers to rival distribution companies—including Adani Electricity Mumbai Ltd. and BEST—as the tariffs calculated for Tata Power were higher than they should be.

There were "arithmetic" and other "calculation"-related errors in the multi-year tariff order for FY24 and FY25 for Tata Power that was issued by the state electricity regulator, Maharashtra Electricity Regulatory Commission, on March 31, according to two people with knowledge of the matter who spoke with BQ Prime on the condition of anonymity. It led to the calculation of higher tariffs for Tata Power, they said.

If corrected, the total tariff for high-end customers consuming between 300 and 500 units will become highly competitive and may be even lower than what is there for Adani Electricity, said the people quoted above.

Sales proposed have not been approved by the regulator, and this has restricted Tata Power from optimising its power purchase costs, which resulted in a tariff hike, according to one of the people quoted above.

Tata Power Distribution has approached the appropriate authority to put a stay on the mid-term review order, and the hearing is in process; the order is expected this week, the person said.

According to the tariff order for FY24, Tata Power’s tariffs for 0-100 units and 101-300 units are lower as compared with those of Adani Electricity. But it was unilaterally increased across segments for Tata Power, even for customers consuming above 500 units for FY25.

Subsequently, the company has petitioned to allow Tata Power to fetch power from outside Mumbai instead of being dependent on their costly imported coal and gas-based power plant at Trombay.

Trombay, located within Mumbai, is a 1,200 MW power plant that takes care of local requirements, even when there is emergency tripping of loads sourced from outside Mumbai.

The Trombay plant is always there to help Mumbaikars, but if cheap power such as renewables can be sourced from outside, it will help reduce tariffs for the customers, said the people quoted above.

Due to transmission corridor constraints, the commission has not allowed Tata Power to draw power from outside Mumbai and increase the quantum of power drawn from embedded generation through PPA extension, the second person quoted above said.

An equitable transmission corridor allocation will allow all utilities to optimise their power purchase costs by drawing cheaper power from outside whenever available, the second person said.

Despite a lower aggregate cost of supply, there was a categorywise hike for high-end customers—subsidising the low-end customers—as the cross subsidy approved by the regulator was not as per the approval, the person said.

Adani Electricity was able to reduce tariffs by optimising the power purchase cost, which included more cheap renewable power, according to an Adani official aware of the matter who spoke on condition of anonymity.

The company now contracts around 30% renewable power of its overall requirement of 2,000 MW for Mumbai.

They have a total of 1,990 MW of long and medium-term power purchase agreements, which include the 500 MW Adani Dahanu thermal power plant, 700 MW of hybrid renewable (wind and solar), plus 500 MW of thermal and 290 MW of renewable tie-ups, the official quoted above said.

Adani Electricity’s efforts towards increasing the share of renewables and optimising power purchase costs have ensured that the tariff increase is the least across Maharashtra in an environment of volatile fuel prices leading to proposed tariff hikes across the country, the official said.

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