New power policy to end monopoly of BEST to supply electricity in Mumbai

There could be no more monopoly of the Brihanmumbai Electricity Supply and Transport (BEST) who at present supply electricity to 10-lakh odd consumers in Mumbai island city between Colaba to Sion/Mahim. The reason, the Union Power Ministry is in the final process of deleting two sections from the Electricity Act 2003, which are vital for BEST Undertaking.

No monopoly
Probably in the next one month, the Cabinet in Delhi is likely to pass a recommendation made by the Union Power Ministry who want to delete Section 51 and Section 42 (3) of Electricity Act 2003.

"The amendment is likely to happen within a month, but we are opposing it," said a BEST official on condition of anonymity. The Parliament approved these two sections in the Electricity Act 2003 after much deliberations and discussions.

This would mean that other power distributors like Reliance Infrastructure and Tata Power, who distribute electricity in suburbs of Mumbai, can also enter the city limits. Presently a case is also going on between Tata Power and BEST on jurisdiction to supply at the Supreme Court. This will allow people to have an option to choose, thus creating competition, which wasn't the case until now.

"This will surely bring relief to residential consumers who would get an option of selecting their power distributor. On the flipside, it will affect BEST, who then will be forced to sell power at higher prices if their consumer base reduces," said a power expert on condition of anonymity.

Apart from this the big power guzzlers like shopping malls, corporate houses having their offices in South Mumbai, 5-star hotels prominent in island city and other commercial centers too will have an option to choose under ‘Open Access' scheme. Under this, any high-end user, whose consumption is above 1Mw, can select his power distributor.

No cross subsidy
The BEST Undertaking is also worried about its inability to cross-subsidize its Transport wing, which otherwise is done with help of its Supply division. For instance in 2013-14, the total deficit ran into Rs 449.06 crore, out of which the transport division bore losses of Rs 748.13 crore. There was a profit of Rs 299.07 crore in the supply division of BEST.

For this, the BEST has also been recovering through electricity bills in form of a surcharge called Transport Division Loss Recovery (TDLR). This simply means that a certain charge is levied in the electricity bills of people residing in island city. Presently the average amount charged is Rs 1.54 per unit to the electricity consumers till 2014-15.

The BEST has been taking loans from various banks and financial institutions so that to remove their losses from the Transport wing. However with this deletion, the BEST will again be in a quandary. The BEST Committee members have decided to get in touch with Union ministers Gurudas Kamat and Milind Deora and other Members of Parliament based in Mumbai to take up this issue at the Centre. The BEST has already sent strong letters to the Power Ministry and state government asking them to take stringent steps to prevent this amendment.

Official speak
"We have been opposing this amendment proposed in the Electricity Act 2003. If any changes are approved then we will be forced to revise tariffs of existing consumers depending on our consumer base," OP Gupta, General Manager, BEST Undertaking.

"We will vehemently oppose this proposal made by the Power Ministry and will do everything possible to save BEST," said Nana Ambole, Chairman, BEST Committee.

Amendment in E.A.2003 after deletion of Sections 51 and 42 (3)
1. BEST can no longer cross subsidize the Transport wing with help of the Supply division
2. Electricity can be distributed in island city by any power companies, thus removing the monopoly
3. Open Access will also allow big power guzzlers like 5-star and 3-star hotels, commercial complexes and malls (more than 1Mw) to choose their own power distributor