Pulling the plug on Mumbai

Interesting to hear RINFRA say that they've been waiting for 10 years for environmental clearance - making it osound like the Govt is 'sitting on their application'.

The fact is that they've been REFUSED permission, on environmental grounds... and rightly so!! Dahanu are the 'lungs' of Mumbai city!

Instead of finding another location, they're 'sulking' that they haven't been granted what they want (they seem to be used to getting their way!)
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Pulling the plug on Mumbai
Dharmendra Jore, Hindustan Times
Mumbai, March 31, 2010

It's going to be a long, hot summer. As in the past five years, there will be no respite for Mumbai's 26 lakh suburban power consumers.

The mercury is fast rising and air-conditioners, coolers and fans are already working overtime. Changing lifestyles and the rise in commercial activities will raise the demand further by 23 per cent, nudging it past 3,000 megawatts (MW) a day. However, supply is likely to peak at 2,400 MW - a shortfall of 600 MW.
And you could face long power cuts or higher bills.

Blame it on the poor expansion of generation capacity and a fight between two arch corporate rivals - the Tata Power Company (TPC) and Reliance Infrastructure (RInfra).

While the state government made many assurances, it could raise power generation by a mere 1.6 per cent over the past year. That leaves it with little choice but to supply power to Mumbai by depriving other parts of the state, where three- to 10-hour power cuts are the daily norm.

In Mumbai, private companies are the major players. TPC generates power and sells it to the Brihanmumbai Electric Supply and Transport (BEST), which supplies the island city, and the Anil Ambani-backed RInfra, which supplies to all of Mumbai's western suburbs and most of the eastern suburbs.

The state-owned power utility plays a direct role only in some eastern suburbs, where it has managed to do away with power cuts altogether. Although this has meant higher bills, customers are satisfied.

BEST too has enough supply; it's only RInfra's customers who face a problem.

RInfra used to buy 500 MW a day from TPC. However, TPC had ambitions of its own in the electricity distribution market. After the Supreme Court allowed it to distribute power to retail consumers (so far it has only directly supplied bulk users like railways) on its own, TPC said it would stop selling to RInfra from April 1 this year.

TPC, which generates 1,900 MW, wants to use the power to supply its own distribution company and sell the remaining power, preferably to the state-owned distributor Mahavitaran. It was encouraged by its first attempt at retailing when many BEST and RInfra consumers switched to it because it offers the best rates.

Alarmed by the prospect of long power cuts and a consumer backlash, the government intervened a week ago. TPC then promised to continue the supply for another month so that the bureaucrats got time to find a solution.

If RInfra is forced to buy power from elsewhere to plug the shortfall, it would have to spend an additional Rs 600-700 crore this summer. This burden is likely to be passed on to consumers.

Both TPC and RInfra officials refused to comment, claiming the government had forbidden them from doing so.

Consumer activist Sandeep Ohri said consumers are the ones who will ultimately suffer. "What we can do is change our supplier. The Maharashtra Electricity Regulatory Commission can play a major role by encouraging competition. It must allow more private players in the city," he said.

A senior bureaucrat saw a temporary solution in the offing. "The government may ask TPC to continue supply to RInfra until the worst of the summer ends," he said on condition of anonymity because the matter was raised in the Legislature and making statements outside the House would breach protocol.

A senior RInfra official said on condition of anonymity that his company was ready to sign a power purchase agreement (PPA) for 500 MW with TPC. "In 2008, we agreed to sign a PPA without preconditions and discuss long-term options for TPC's Unit 8 [a new unit that came up last year]." TPC officials countered
that it could not be forced to supply power to RInfra.

RInfra said that expansion of its Dahanu thermal plant (which has a capacity of 500 MW) by 1,200 MW would solve Mumbai's problem. But it's stuck in red tape. "We have been waiting for environment clearance for 10 years," said the official.
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http://www.hindustantimes.com/News-Feed/mumbai/Pulling-the-plug-on-Mumbai/Articl\
e1-525255.aspx
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2009 HT Media Limited.

Calculation of Wheeling Charges - RTI reply from MERC

Those who are interested in switching over from RINFRA to Tata, already know that they would still need to pay RINFRA 'wheeling charges' - which is charged by the network owner to the billing/distribution supplier.

MERC in its Interim Order has stated that Wheeling Charges should be paid even by switchover customers.

The question in my mind was how is the Wheeling Charges calculated for TPC and RINFRA and the following details were provided by MERC (under RTI).

RINFRA-D's Low Tension (LT) for FY 2009-10, is calculated as under:
1. Wheeling Charges for the year Rs. 121 per kW per month
2. Contract Demand is 4600 MVA / MW
3. Wheeling Cost for the year is Rs. 667.92 cr (121 x 4600 x 12 / 10000)
4. Annual Sales for the year is 7560.17 Million Units
5. WC is Rs. 0.88 per kWh (667.92 / 7560.17 x 10)

RINFRA-D's High Tension (HT) for FY 2009-10, is calculated as under:
1. Wheeling Charges for the year Rs. 108 per kW per month
2. Contract Demand is 317 MVA / MW
3. Wheeling Cost for the year is Rs. 41.06 cr (108 x 317 x 12 / 10000)
4. Annual Sales for the year is 896.59 Million Units
5. WC is Rs. 0.46 per kWh (41.06 / 896.59 x 10)

TPC-D's Low Tension (LT) for FY 2009-10, is calculated as under:
1. Wheeling Charges for the year Rs. 160 per kW per month
2. Contract Demand is 110 MVA / MW
3. Wheeling Cost for the year is Rs. 21.15 cr (160 x 110 x 12 / 10000)
4. Annual Sales for the year is 572.23 Million Units
5. WC is Rs.. 0.37 per kWh (21.15 / 572.23 x 10)

TPC-D's High Tension (HT) for FY 2009-10, is calculated as under:
1. Wheeling Charges for the year Rs. 78 per kW per month
2. Contract Demand is 398 MVA / MW
3. Wheeling Cost for the year is Rs. 37.25 cr (78 x 398 x 12 / 10000)
4. Annual Sales for the year is 2065.90 Million Units
5. WC is Rs. 0.18 per kWh (37.25 / 2065.90 x 10)

For an RINFRA switchover consumer. Take the standard TPC rate, then deduct the TPC-WC (0.37) and then add the RINFRA-WC (0.88).

An Excel sheet is available with me, for those who are interested in doing 'what-if' scenarios.

RTI can get us information - but once we receive it, experts need to 'decode' it and then take follow up action. Many of the technical experts would be interested in this info and how it will affect us going forward.

There is still a VALID dispute whether switchover consumers need to pay the RINFRA WC at all or not - and this matter is also being taken up by the BIJLEE Group.

Trust this has been of help.

Uniform power tariff will cost government Rs. 3,000 cr

At the risk of being unpopular, I would like to repeat that UNIFORM TARIFF is not the answer!

Not only does it negate the benefits of a competitive environment, it is also NOT permitted by the EA 2003, UNLESS the State Govt grants a subsidy.

When the State Govt grants a subsidy - this will eventually need to be collected (as taxes) from EVERY individual, whether he/she is an electricity consumer or not!

Here is an example of what will happen - the State Govt will effectively undertake to 'fund' these utilities for their 'obscene' rates, and make the general public pay for it, by increasing taxes!! The general public will never know HOW much was collected as additional tax to pay this Subsidy!

Suppose the Govt increases the taxes across many items - and ends up collecting MORE than the Subsidy amount??

In such a situation how can uniform tariff be 'consumer friendly'?

This is similar to leaving our environmental problems to our grand-children..."as long as WE don't have to pay, who cares" - right? Is this the LEGACY we want to leave behind?

We must move away from such 'protectionist' measures and let open market competition 'force' the prices down.

Many people wonder whether RINFRA's consumers switching to TPC would make a big difference. Here are some facts:

1. RINFRA's avge costs are higher than TPC and so the consequent cross-subsidy is a larger spread.
2. On a pure arithmetical basis, it IS more cost-effective for RINFRA's high consumption users, to switch to TPC.

Now, it may appear that TPC 'wants' only high-end consumers - which is not true, as any RINFRA consumer can switch.

There are 2 sides to any argument. One could assume that since RINFRA's higher consumers have moved, it would have raise the level for the rest of its remaining consumers. However, the other side of the story is also that the Demand that RINFRA has to meet will also be lower! Consequently it would have to purchase lesser of the 'expensive' power..

This can only be determined if a really SUBSTANTIAL no of consumers switch. As I understand it, as of date only about 3000 consumers may have completed the switchover. Which is too minuscule a no considering that RINFRA has about 2.7 Million consumers!

The issue is not about RINFRA or TPC being benefited - its about each one of US - each consumer - having a choice.

As far as RINFRA's costs are concerned, I guess MERC's investigation would throw light on whether they actually needed to spend all that money on the Mumbai electricity business .. or even if they actually DID spend that money on us - maybe it WAS diverted into the RINFRA group's other ventures.

Since they have admittedly, not been maintaining separate accounts, there is quite a likelihood that they took money from us and spent it elsewhere.

Trust I have thrown some light on the issue. 

(Related news item here...)
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Uniform power tariff will cost government Rs3,000cr
Ashwin Aghor / DNA
Wednesday, December 16, 2009 2:16 IST

Mumbai: If the state government does decide to take power minister Ajit Pawar's recent announcement about introducing uniform power tariffs in Mumbai seriously, it will have to be prepared to bear an additional burden of Rs3,000 crore annually for the subsidies the city's four power suppliers will have to be provided to bring their rates on a par.

Last week, during the winter session of the assembly, Pawar assured the house that the government will explore the feasibility of uniform power tariff for the city. Uniform tariff is more consumer-friendly, and has already been implemented in cities like Delhi, Kolkata, Bangalore and Ahmedabad, despite them having more than one supplier.
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http://www.dnaindia.com/mumbai/report_uniform-power-tariff-will-cost-government-rs3000cr_1324178

Calculate savings of switchover to TATA

After much work, anguish and deliberations, MERC had issued an Interim Order in the matter of switchover to TATA. I am happy to inform you that we have successfully had the first case of a switchover. An existing RINFRA consumer has been duly moved to TATA - using RINFRA's network and TATA's Meter!

Now, before everyone decides to do the same, first check whether it makes economic sense to switch to TATA. To help you, I have prepared a detailed Excel sheet for Single Phase, Residential consumers (LT-I) Tariff showing the exact calculations and savings of moving from RINFRA to TATA.

Here are some of the results of the calculations in the PRESENT scenario.

For 1,500 units per month:
Existing RINFRA Bill = Rs. 13,391    Switchover TATA Bill = Rs. 9,212
Monthly Savings = Rs. 4,179    Annual Savings = Rs. 50,147

For 1,000 units per month:
Existing RINFRA Bill = Rs. 8,309    Switchover TATA Bill = Rs. 5,828
Monthly Savings = Rs. 2,482    Annual Savings = Rs. 29,780

For 800 units per month:
Existing RINFRA Bill = Rs. 6,277    Switchover TATA Bill = Rs. 4,474
Monthly Savings = Rs. 1,803    Annual Savings = Rs. 21,634

For 500 units per month:
Existing RINFRA Bill = Rs. 3,172    Switchover TATA Bill = Rs. 2,387
Monthly Savings = Rs. 784   Annual Savings = Rs. 9,413

For 350 units per month:
Existing RINFRA Bill = Rs. 1,857   Switchover TATA Bill = Rs. 1,490
Monthly Savings = Rs. 368    Annual Savings = Rs. 4,412

For 200 units per month:
Existing RINFRA Bill = Rs. 879   Switchover TATA Bill = Rs. 760
Monthly Savings = Rs. 119    Annual Savings = Rs. 1,427

For 100 units per month:
Existing RINFRA Bill = Rs. 316    Switchover TATA Bill = Rs. 307
Monthly Savings = Rs. 9    Annual Savings = Rs. 108

It seems clear from the above, that only those consumers who have a higher monthly consumption would benefit more by switching to TATA from RINFRA.

However, the decision to DO-THE-SWITCH must be an informed, long-term decision and not a short-term knee jerk reaction. The attached file covers the PRESENT scenario as well a few other known possible scenarios that may happen in the next one year. For instance:

a) Due to approvals from earlier MERC and ATE Orders, RINFRA already has an 'uncovered gap' of Rs. 1,079 crores! Suppose they get an approval to charge this in next year's Tariff - what would be the impact?

b) MERC has stayed the RINFRA June 2009 Tariff Order, but suppose the stay order is lifted?

c) RINFRA has gone to High Court and asked for a stay on the limit of Fuel Adjustment Charge (FAC) of 67 paise. They are asking for 113 paise/unit. Suppose they succeed?

d) In this Interim Order, MERC has allowed RINFRA to collect Wheeling charges, despite our protests that we have already paid for these. In case, it is ruled that we do not have to pay RINFRA Wheeling charges, then the NEW switchover bills will be even more lower.

e) If the consumer uses a TATA meter instead of a RINFRA Meter, it is possible that consumption recording itself is lower!

The attached Excel file also shows how much would be the difference in case the above scenarios start playing out.

Do feel free to circulate this to all concerned and please send me feedback - especially if there are any errors (this is so complicated, even though I've tried my best, there may still be some mistakes!)

This Excel file is also available on the BIJLEE Group in the Files section here: http://groups.yahoo.com/group/bijlee/files/_RINFRA_SWITCHOVER/

I will request MERC to prepare such types of Calculators and host them on their websites.

Trust this has been of help to you :)