Collective Effort to Tackle the Power Crisis Faced by MSMEs

Are the inefficiencies of utilities making a big hole in the pockets of the consumers? This is what the leading MSME associations of the country objected to.

In a petition to Uttar Pradesh Electricity Regulatory Commission (UPERC) filed by Federation of Indian Micro and Small & Medium Enterprises (FISME), Indian Industries Association (IIA) and Energywatch have objected application for determination of Annual Revenue Requirement (ARR) and Tariff for FY 2016-17; and True up of ARR for FY 2013-14 under Section 64 of the Electricity Act, 2003 filed by Paschimanchal Vidyut Vitran Nigam Ltd (PVVNL) and other Discoms – PuVVNL, MVVNL, DVVNL and KESCO.

The associations, the members of which are consumers of PVVNL and other Discoms, have appealed that the inefficiencies of the Utilities should not be passed on to the consumers and the UPERC should disallow all the costs incurred by the Utilities due to its inefficiencies.

“Despite enactment of Electricity Act, 2003 which was enacted to promote private participation in the power sector, the Distribution business in UP is being carried out by Government owned entities thereby defeating the purpose of Electricity Act, 2003,” the petitioners highlighted.

The petitioners further stated that the Distribution utilities have been enshrined with the duty of supplying electricity to the consumers on the basis of cost of supply of electricity for each category of consumers.

However, the industrial consumers are slapped with higher costs to cross-subsidize the tariff of other categories which is contrary to the objection of Electricity Act, 2003.

The petitioners, who have filed an objection with the UPERC, have said that the ARR for FY 2016-17 can be fixed only after voltage wise supply study is conducted and tariff of each category should be in line with the tariff policy.

The manufacturing companies in the state want immediate steps for eradication of cross subsidy which is taking a toll on the companies and making them in-competitive in the Make in India programme.

Meanwhile, according to a recent media report, Power regulators have launched an internal study to look into various options of designing ‘progressivity’ in tariffs. The move is mainly due to mismatch between the average tariff and cost of supply, barriers put up by states in providing open access, and high subsidy and cross subsidy.