Friday, February 23, 2007

" A learning experience for both of us !! "

I participated in the Appellate Tribunal for Electricity (ATE) hearing on Feb 20-21 in New Delhi. It was a fantastic learning experience for me.

The entire atmosphere was charged with an air of supreme importance. I was a part of a team of 5, that represented the +25 lakh consumers of Reliance Energy Limited’s (REL) Mumbai consumers.
What an honour !!

The Background
Some of you are aware that this was with regard to the appeal made by REL against the October 2006 Tariff Order passed by the Maharashtra Electricity Regulatory Commission (MERC).

As part of the annual truing up and tariff fixing exercise, MERC had disallowed certain expenses incurred by REL, which is what REL appealed for. This totaled well over Rs. 1,000 cr.

- Rs. 411 cr (towards expenses and income-tax)
- Rs. 226 cr (of allocated reserves)
- Rs. 350 cr (towards the old rebates/discounts of BSES)
- And some uncalculated amounts towards reduction in distribution losses and other generation parameters

It is important to know that REL’s October tariff was based on an approved total requirement of Rs. 2,902 cr – so if they DO get this additional Rs. 1,000 cr, it will mean that the existing tariff can go up by another 35% !!

The Players
REL had their hot-shot team of half-a-dozen legal experts, besides their own team from Mumbai. MERC was represented by 2 legal experts, Prayas (a leading Energy NGO from Pune) also appeared and the Bombay Small Scale Industries Association (BSSIA) lead the team of consumers.

The hearing was spread over two days, with REL taking up a greater part of the 1st day, followed by Prayas, while the BSSIA and MERC did the honours on the 2nd day.

The Discussions
REL gave elaborate reasons for wanting to claim the disallowed amounts. They claimed that the additional Employee costs were on account of implementing MERC’s Statutory Regulations (!) and consumer-friendly services like Call Centre and various language bills.

REL also felt that MERC had unfairly disallowed proportionate income tax, just because REL was doing other business (well, it admitted they were doing other business!). The experts from REL’s legal company, did an admirable job of presenting their case over a (painstaking 4 hours .. phew ..) I must mention the role of the leading lady – who managed to hold her own, in the midst of the utter confusion of the numbers!

Temporary Relief
On an earlier date, Prayas mentioned that the Rs. 350 cr issue was pending in the Supreme Court (Tata Power has challenged ATE’s order), and the Tribunal asked BSSIA whether it wanted REL to withdraw their appeal or continue to argue the matter. BSSIA said in any case tariff was to be fixed by MERC and not ATE, and therefore the public would have to be called in for a hearing before implementation.

However, when pushed further, BSSIA said that it was prudent to let REL withdraw the appeal for Rs. 350 cr and provide some temporary relief to Mumbai consumers. In any case, if the Supreme Court ruled in favour of REL, no one would have any choice.

Hence, REL filed an amendment the next day and withdrew the demand for 350 cr. Consumers will have temporary relief that the 97 paise per unit will now not be charged. For those who are aware, there's a line which keeps appearing in our bills "AEC not included in this bill" - well, it WON'T - unless and until the Supreme Court decides !

My presentation
I had the privilege of making the presentation on behalf of the BSSIA. We are given to understand that REL does not have the License in their own name and in fact they had made the present appeal also, only as a corporate entity.

This created quite a commotion and the Tribunal asked us as to how does the consumer benefit, if at all, from this fact. We then pointed out that if REL was to truly comply with the strict License conditions (and if MERC would have ensured compliance), the tariff structure would be a lot more different (read: lower).

MERC’s own Tariff regulations actually specify that a part of the profits of the “other business” would be reduced from the total amount of money to be collected from electricity consumers. With due respect, I was actually surprised at even being asked that question !!

We also pointed out that MERC did not ensure that it complied with Tariff procedure. MERC is supposed to call a public hearing before fixing tariff. However, as regards the Rs. 350 cr issue. MERC did not discuss this in the public hearing of June 2006, but went ahead and directly inserted this in the final October 2006 order. We stated that we would like MERC’s functioning to be a lot more transparent and consumer-friendly.

We also contended that if REL was unhappy with a part of the Order, they need not have implemented it at all and gone straight into appeal. Just like how BEST did when they were unhappy with MERC’s March 2006 Order, which was only implemented in October 2006.

The most important point we made is that Tariff fixing is the sole responsibility of the MERC and NO ONE else can do that – neither the ATE nor the Supreme Court. So even if anyone of these authorities awarded (or adjudicated) any amounts in favour of any supplier, MERC would HAVE to call the public for a discussion before fixing the tariff.

There were many other issues that we took up and I really appreciate the patience of the Tribunal bench in dealing with novices like me ! They are used to dealing only with Government, Corporates and members of the Legal fraternity – but our team really pushed them to their limits! Hat’s off to them ...

The Result ??
I don’t know what will come out in the final order, but we tried our best, for what its worth we’ll keep trying to do more of what we think is right – and I think justice WILL be done … eventually !

Well, I think it can be aptly summed up in the words of one of the Hon’ble bench member, who said, “This has been a learning experience … for both of us” Touché!

I’ve narrated this in good faith, for the public good, so that the people understand how things work. This is without prejudice. I trust no one will take offence.

Well … and that’s how I feel …

Friday, February 16, 2007

This is how much more BEST will charge from 1st April.

BEST, Mumbai has filed its Multi-Year Tariff (MYT) petition, with MERC, which will come up for a Public Hearing on Feb 27th.

These new rates, if approved, will be applicable from 1st April, UNLESS .. you oppose it .. the choice is yours ..

Taking sample cases, here is a quick look of what may happen (the amounts incl. taxes and duty):

Residential Users (with Single phase supply)
100 units .. present .. Rs. 110 .. proposed .. Rs. 211 (91% up)
300 units .. present .. Rs. 707 .. proposed .. Rs. 1,226 (73% up)
400 units .. present .. Rs. 1,406 .. proposed .. Rs. 2,550 (81% up)

Residential Users (with Three-phase supply)
100 units .. present .. Rs. 206 .. proposed .. Rs. 285 (39% up)
300 units .. present .. Rs. 802 .. proposed .. Rs. 1,279 (59% up)
400 units .. present .. Rs. 1,459 .. proposed .. Rs. 2,603 (78% up)

Commercial users (LTC-1/LF-2)
300 units .. present .. Rs. 1,332 .. proposed .. Rs. 2,149 (61% up)
1000 units .. present .. Rs. 5,660 .. proposed .. Rs. 7,303 (29% up)
2000 units .. present .. Rs. 13,070 .. proposed .. Rs. 15,879 (21% up)

(This does not include variable charges for Commercial users above 3000 units per month).

I haven't presented the calculations for Industrial users, but that data is also available in 340-page document.

One of the main reasons for this is that BEST proposes to spend approx Rs. 800 crores in capital assets, over the next three years. Funny, since their average spending over the past 5 years is only in the range of 60-70 crores !!

Well .. as I said, the choice is yours .. keep quiet and pay up .. or stand up and oppose it.

The hearing is scheduled for Feb 27th and the last date for filing comments / objections with MERC is Feb 25th. Anyone else interested in filing a statement?

In case you are interested in what's happening on the electricity issue, please join the bijlee yahoo group at and keep yourself updated on the electricity issue - so you don't get rude SHOCKS !!

BTW. The numbers are driving me nuts .. in case I have made a calculation mistake, please bring it to my notice ! Thanks, in advance.

Well ... and that's how I feel ...

Saturday, February 10, 2007

Private Firms covered under RTI - Great !!

Here's some good news .. private companies who report to any "Regulatory Authority" are also covered under the Right to Information (RTI) Act.

Which means that any company, whether public orprivate, if it is "reporting" to any Government or Regulatory authority, it is liable to give out information under RTI.

With this, the RTI list also includes:
- Private Banks (via RBI)
- Stock Exchange Listed companies (via SEBI)
- Telecom companies (via TRAI)
- Electricity companies (via CERC/MERC/State Commissions)
- Insurance companies (via IRDA)

Some more Regulatory Authorities are in the pipeline:
- Pre-examination Coaching Centres Regulatory Authority of India
- Airport Economic Regulatory Authority

There should be more transparency, now that Consumers can now hold all such companies "answerable" and "accountable."

This news item appeared in MINT, the business newspaper from Hindustan Times. MINT is a great new, refreshing way to read business news...

Here's the link:

I must mention that one needs to register at the site to read the article (however, it's free - and takes less than a minute).

But for those who haven't registered (or won't !), I have reproduced a few excerpts from the article below....

Companies, banks under purview of the govt have to honour RTI requests, clarifies information commission - K. P. Narayana Kumar

M.M. Ansari, information commissioner at the Central Information Commission that oversees the implementation of the Right to Information (RTI) Act, 2005, told Mint that as long as these companies reported to a regulator or a government department, they were within the purview of the sunshine law.

According to the commission, companies will not have to appoint an information officer to deal with right-to-information demands the way government entities do. Applicants will route their requests through the relevant agency.

“Applicants have every right to seek information on a private company even though it is in the private sector, if it reports to a government body,” Ansari says, citing sections of the Act that made this possible.

Only applications that served public interest would be dealt with, not those that sought to erode a company’s competitive position, he adds.

The message: you can ask a cola company for details on how much water it used and where the water came from, but not the formula of its fizzy drink.

If there is any difference of opinion on what constitutes public interest and what doesn’t, the commission will intercede and decide.

Well, and that's how I feel ...