Rail commuters to gain at cost of Tata Power consumers' pain?

In a move aimed at containing increasing fares by cutting down on its burgeoning power bill, the Central Railway (CR) has approached the Maharashtra Electricity Regulatory Commission (MERC), asking to be given the status of ‘deemed licensee’ so that it can buy electricity from other states — especially Gujarat — at cheaper rates. Western Railway (WR) also has a similar plan in mind.

Tata Power has nearly 5 lakh consumers in Mumbai and has also got permission to lay cables in the island city
Tata Power has nearly 5 lakh consumers in Mumbai and has also got permission to lay cables in the island city

While the proposal, if granted, will help passengers of both long-distance and local trains by preventing fare hikes, it will adversely affect nearly 5 lakh consumers of Tata Power, which may have to raise its tariffs if it loses a major consumer like the Railways.

At an MERC hearing on December 16, CR authorities contended that the current power rates are too high for them and so they want to buy electricity from other states. “We want to procure power from Gujarat as that would save us at least Rs 4-5 per unit, which is a substantial saving,” said a CR official. This will also help the Railways save around R200 crore a year as the power cost has risen by over 40% in the last two years.

Sources said that even the Western Railway has written letters to Gujarat power suppliers earlier and was considering procuring 50 MW at approximately Rs 5 per unit. Tata Power, which supplies 350 MW of electricity to the Railways daily — used to power trains on both CR and WR — contended before the MERC that the move would have an adverse impact on the company and its consumers. “We have filed a formal application asking for some time. Railways is a major consumer,” said a Tata Power official at the hearing.

Power experts said that if the Railways gets deemed licensee status, Tata Power may have to compensate for the slump in demand by hiking power tariffs for its residential and commercial consumers. Tata Power has nearly 5 lakh consumers across Mumbai and it has also got permission to lay cable lines in the island city.

At the hearing, MERC members said that process of electricity distribution is a highly specialised job, similar to running of trains and it is not just about the economics of the issue. “This case throws up interesting issues for us too,” said an MERC member, adding that the commission has asked the Railways for a detailed plan.

Power experts caution that the deemed license status, while giving the right to trade electricity, also comes with the responsibility of transmitting and distributing it. “If CR and WR become deemed licensee status holders, they cannot refuse to supply power to smaller agencies and organisations,” said a power expert.

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