The Tribunal dismissed Tata Power's petition challenging MERC's order to impose cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC

Mumbai: The Appellate Tribunal for Electricity (ATE) has dismissed the petition of Tata Power Company (TPC) challenging the Maharashtra electricity regulator's order on imposing cross subsidy surcharge from high billing consumers, who have migrated from Reliance Infra to TPC, reports PTI.

Tata Power had challenged the Maharashtra Electricity Regulator Commission's (MERC) order, which allowed Anil Ambani-led RInfra to collect cross-subsidy surcharge from its high-billing customers, who have migrated to rival Tata Power in the interest of the consumers as well as the licensees.

In a September last year, the MERC had said that if high-end consumers of a supplier move to another one under open access system, they will have to continue to cross subsidise the lower-end consumers of their previous supplier.

The ATE, in its order dated 21st December said: "Without reasonable subsidy, there is a possibility that all the consumers in RInfra may move to TPC and in that event, the monopoly of the TPC would be created.

"This action of imposing cross subsidy surcharge is to preserve the competition in order to promote the industry and simultaneously to protect the interest of the consumers".

Under the cross-subsidisation regime, consumers with higher power usage compensate for lower costs per unit charged from those consuming less than 300 units a month.

After the consumers were given the choice to switch power discoms, some high-end customers shifted to Tata Power, which had lower rates as a result of no obligations to serve low-end consumers at cheaper rate, the spokesperson said.

Upholding the decision of the state Commission, the ATE said: "MERC is required to look after not only the interest of the consumers but also the interest of licensees.

"Therefore, the Commission, while deciding that the change over consumers are liable to pay cross subsidy surcharge to RInfra for using their network has in fact taken into consideration the interest of the consumers as well as the interest of the licensees. Therefore, findings and directions given (by MERC), which would promote healthy competition are perfectly justified".

RInfra is at present serving around 28 lakh consumers in its distribution areas in suburbs, out of which, almost 23 lakh consumers are low-end ones, including 12 lakh coming from the unstructured developments in the suburbs, who are cross subsidised.

On the contrary, nearly 90% (bulk) of Tata Power customers include railways, refineries, large housing and commercial complexes and multiplexes.