Mumbaikars to face hike in monthly electricity bills due to spiralling coal prices

Mumbaikars could face a hike in their monthly electricity bills because of the spiralling coal prices that are expected to be recovered through fuel adjustment charge (FAC) by power companies. Amid public outcry over inflated billing during COVID-19, the Maharashtra Electricity Regulatory Authority (MERC) had directed city utilities Tata Power Company (TPC) and Adani Electricity Mumbai Limited (AEML) to create an FAC fund to be recovered from consumers at a later date.

Industry sources said the FAC fund, which was positive in August last, turned negative a month ago. The prices of imported coal have increased by 200 per cent in the last two years and are expected to rise further in view of international issues like the Ukraine-Russia war.

BJP workers protest against fat power bills at Mulund on November 23, 2020. Pic/Sameer Markande

So, when TPC and AEML start charging FAC in the near future, say from April, the customers will have to pay more. The delay in the recovery of FAC will mean bulkier bills. Sources said TPC consumers will be impacted more because the company's Trombay generation units use high quality imported coal to reduce air pollution. According to experts, the FAC could increase per unit rate by anywhere between 25 paisa and R1.10, depending on the cost at which power is purchased by the respective distribution companies. The third distributor Brihanmumbai Electric Supply and Transport (BEST) which buys 80-90 per cent of its total requirement from TPC will also pass the increased cost onto its consumers.

We optimise tariff: companies

TPC said it makes all efforts to optimise the cost of power supply to avoid any tariff rise, on account of FAC, to consumers by pooling in power from coal, gas, hydro and renewables. "Due to force majeure conditions such as war, there has been an increase in international fuel prices which impacts the power purchase cost. However, TPC sources most of the coal from Indonesia through a long-term fuel supply agreement linked to the local indexation. Due to this reason, coal sourcing cost is very much optimised," it said in a statement.

It further stated that the supply to Mumbai consumers is a mix through the 180 MW gas-based price which is linked to APM (administered pricing mechanism) gas and 440 MW of hydropower which brings down the pool cost of power. "In addition to this, TPC sources nearly 350 MW of renewable power at very competitive tariff," it said, adding that since the Trombay plant has to comply with strict environmental norms, it uses enviro coal which produces very low ash and sulphur.

An AEML spokesperson said the company's consumers can expect its tariff structure to be the most economical and sustainable in the city. "AEML has taken concrete steps to provide long-term tariff visibility to our consumers. 100 per cent domestic coal supply to Dahanu thermal plant ensures that consumers are not impacted by the alarming increase in imported coal prices," he said, adding that 700 MW renewable energy supply has significantly diminished the company's exposure to higher prices. "AEML is also in the process to procure additional 1,000 MW power with the largest portion coming from renewable energy sources," he said.

Strike off, but heat stays

Like Mumbai utilities, the Maharashtra State Electricity Distribution Company Limited (MSEDCL) is also struggling to cope with the coal crisis. In addition, the employee strike added to the misery of state-owned distribution, generation and transmission companies. The strike was withdrawn on Tuesday evening after energy minister Nitin Raut discussed the workers' opposition to the privatisation proposal mooted by the Centre.

Earlier in the day, Raut had cancelled a meeting with employee unions that did not respond to his call for withdrawing the strike. Raut said the state government was not in favour of privatisation. He said the coal shortage was bound to impact MSEDCL's tariff in future.

"We have been supplying a record quantity of electricity in the past few days. The consumption has increased because of the rise in temperature. Some of our generation plants are shut because of coal shortage and others may shut soon as they don't have stocks," he said, urging the people to be economical in consuming electricity.

Rs 1.10
Maximum likely hike per unit

200%
Rise in imported coal prices in past two years