BEST’s power monopoly ends, Tata enters Mumbai

MUMBAI: BEST’s power monopoly finally came to an end on Friday. Tata Power Company (TPC) has now been granted a distribution licence in Mumbai for the next 25 years, and it will now set foot in the island city—giving residential consumers a chance to switch to cheaper power. 

This could be a big blow to BEST ( Brihanmumbai Electric Supply and Transport), which has been serving 10.5 lakh consumers between Colaba/Cuffe Parade and Sion/Mahim areas for several years. BEST officials apprehend large-scale poaching and “cherry picking” of consumers by TPC. 

Although MERC mentioned in its order that it was granting the licence “in public interest”, it also pointed out TPC’s “inadequate network rollout plan” and directed Tata officials “to approach the commission in 6 weeks with a fresh rollout plan”. The order clearly stated: “The rollout plan submitted by TPC is inadequate as it seeks to cater to 50% of the total expected load by catering to only 31% of consumers, which is not conducive to a level playing field and genuine competition. In its rollout plan, TPC has not addressed the past directions issued and timelines prescribed by the commission. TPC has also not proposed a detailed methodology to ensure that laying of network will be done to ensure supply to all categories of consumers including the category of consumers with lowest consumption.

“TPC has faced several operational difficulties which have delayed its network expansion. Therefore, the commission deems it appropriate to specify a phase-wise rollout to ensure that TPC lays its network in its entire area of licence in a time-bound manner,” the order pointed out.

BEST opposition

BEST had strongly opposed TPC entry, stating that its very existence will be endangered and around 47,000 employees would become jobless. It also informed MERC that that this could result in political and social unrest and may lead to a law and order problem. The commission, however, observed that the Electricity Act allowed existence of two or more parallel distribution licencees in the same area and, as held by the Supreme Court, no exemption was provided for a local authority to that extent.

The order stated: “TPC has been authorized to supply to all consumers in areas which include those covered by BEST. Thus, two licencees are already operating in the area of BEST. Considering this fact, the commission is of the view that there is no merit in the apprehension of BEST that owing to the grant of a licence in its area to any other person, the very existence of BEST will be endangered. BEST would require to address the competitive environment through its own performance.”

Tata Power also got a transmission licence granted for the transmission and the receiving stations (or Transmission Receiving Stations) located in and outside the Mumbai area, owned by TPC or proposed to be constructed and owned by TPC in future and forming part of Intra-State Transmission System of Maharashtra.

In a statement issued on Friday, TPC said it will “support BEST’s case for transport subsidy to be rationalised across each electricity unit collected so that it’s not just left to BEST to collect the same. It will also make sure that BEST margin of business is not affected adversely as it has been a long-term participant in power supply system in Mumbai.”

Boost for consumers

* MERC grants distribution licence to TPC to supply electricity in proposed area of supply (including island city) for a period of 25 years from August 16, 2014

* It also directs TPC to submit new rollout plan within 6 weeks with a fresh rollout plan in accordance with the concerns expressed

* The MERC also grants Tata Power a transmission licence for transmission and receiving stations located in and outside the Mumbai area, owned by TPC or proposed to be constructed and owned by TPC in future and forming part of Intra-State Transmission System of Maharashtra

* The Commission also rejects BEST proposal, which opposes TPC entry on the ground that BEST’s existence will be endangered and its 47,000 employees will be jobless. BEST also alleged before MERC that there will be cherry-picking of its consumers