Is MERC going to really allow Consumers a choice - a REAL CHOICE??

This post is excerpted (is there a word like that?) from my latest submission to the Maharashtra Electricity Regulatory Commission (MERC) of which I am an Authorised Consumer Representative for a few Cases pertaining to electricity distribution in the State of Maharashtra.

The issue in the present case is the CHOICE of electricity supplier, in the event that two distribution licensees are present in an area. This situation exists in the Mumbai suburbs where Reliance Infrastructure and Tata Power both have a license to distribute electricity.

MERC has severely restricted the choice that consumers can exercise. Both companies have elaborate setups, expensive advocates, humungous resources and are/have been throwing loads of paper-work and contentions at each other and at MERC ...and also at us, Consumer Representatives.

There have been numerous hearings in the matter and what I wrote to them, was more of an Appeal than a formal submission. An appeal to give us back our right to chose the electricity supplier of our choice - and to remove the unnatural (and illegal!) constraints that had been created. 

Here are the excerpts...

(For those interested in the Chronology of events, a very brief Background is given at the end of the excerpt)

==========
 

• The Case is governed by the ruling of the Supreme Court allowing Consumers (please note, there is no reference/definition of the word, Customer) to have the liberty of choosing their electricity supplier if two distribution licensees exist in the same area. The Commission cannot lose sight of this guiding Order, while deciding this Case. 
• The basic issue is that of CONSUMER CHOICE in a competitive scenario. The Supreme Court has clearly laid down not only a Strategic matter, but also, to some extent, given some general principles for Executive action. The Commission must not OVERSTEP (as it has done in the past, according to none other than the Supreme Court itself!) and distort the Order and its dilute its efficacy. 
• All other issues like laying cables, cross subsidy, regulatory asset charge, consumer mix, etc., need to be dealt with while keeping the end objective in mind. The Commission MUST not be guided (or driven!) by Licensees and their own constraints!
• I have read the numerous submissions made by both parties and the on-going charges and counter-charges and submissions and rejoinders and responses - this can go on ad infinitum (or should I say ad nauseum!) They are just seeking to further complicate the matter and delay the decision-making.  
• Both parties, RInfra and TPC are repeatedly referring to the Supreme Court order - but using selective phrases/passages/paras out of context to suit themselves. While they get to present their views ably supported by professional advocates, the hapless consumer has to depend upon people like us (who are not available to devote themselves full-time to this activity).  
• As a result, if a Consumer’s point is not put across forcefully (or even put across at all!) it is likely to be overlooked by the Commission who is drowned in the barrage of submissions made by both parties. It is therefore the prime duty and responsibility of the Commission to err on the side of the Consumer and not otherwise.
• It is likely that the parties are further going to divide Consumers into various groups and then advocate the benefits that one group is receiving (or likely to receive) and pit that against the dis-benefits accruing to another group.
• This artificial distinction has NOT been made out anywhere in the Law (the EA2003) or by the Supreme Court (which has upheld the principles in the preamble of the Act). When I request the Commission to uphold Consumer choice - it is WITHOUT bias to any group. Sometimes things need to be left to themselves and within the given constraints, equilibrium will be found. 
• Yes, there WILL be heartache and heartburn, but a Regulator needs to know when to step aside and let market forces drive the situation. Give companies a constraint - and see how innovative they can get! 
• The Reliance Group and the Tata Group have been at the forefront of innovation in many products and services and the Commission should back down and not try to ’protect’ one or the other. It should leave the two of them to fight for the winning the Consumer!
• The Order in Case 151 itself, severely restricted consumer choice and subsequent tariff Orders further complicated the calculations and is confusing Consumers. This Order has the potential to undo all the confusion and restore Consumer choice (for ALL Consumers, across various ’groups’ as selectively and artificially defined by the two parties) devoid of the various ifs and buts that constrain it. 
• The Commission MUST restore the right to choice of selecting electricity supplier. The methodology was already laid down in the earlier Interim Order and the scope of that should have been further widened - but it has been instead narrowed subsequently.

         The Commission must seriously ask itself....

• Does the Consumer REALLY have a choice? 
• The SAME choice that an Act of Parliament has granted it? 
• The SAME choice that the Supreme Court reaffirmed in its Order? 
• Or is the Commission again going to ’overstep’ itself - only to be censured later - at the cost of lakhs of consumers losing their right?? 

          The matter is in your hands.

==========

Background
In 2004, MERC has incorrectly passed an Order disallowing Tata Power from supplying electricity to consumers because its license precluded it from doing so. Reliance continued to enjoy a monopoly and the rates kept going through the roof. Tata Power eventually won the case in the Supreme Court, in 2008, which upheld its legitimate claim that it did indeed have such a license and censured both the MERC and the Appellate Tribunal for Electricity for overstepping their jurisdiction. 

The Supreme Court in its Order, clearly stated that the electricity consumer MUST have a choice and a right to exercise that choice - upholding the Electricity Act 2003 and its preamble.

Subsequently, in 2009, MERC finally came out with a methodology of effecting this switch/change and consumers were happy that they finally had a choice!Reliance consumers promptly started switching over to Tata Power, whose tariff rates were lower.

...and then things went downhill thereafter. Reliance played spoilt-sport and complained to MERC that Tata was indulging in cherry-picking of only higher end consumers. Tata could not prove(!) that it wasn't proactively doing the cherry-picking, but yes, it was true that the higher consumption consumers, obviously, stood to benefit the most! And so MERC put a constraint on the switch/change and said that only those with consumption BELOW 300 units per month could switch/change!

Thereafter, a series of hearings, spanning months, and a few tariff orders later, the equation seemed to now become skewed in Reliance’s favour and MERC called for more hearings and this has been going on now. For those inclined to have details - please refer Case 151 of 2011 (Order passed) and now Case 85 of 2013 (present case, hearings still going on).

NEWS: Users oppose RInfra surcharge

 I made a detailed presentation at MERC's Public Hearing at Rangsharda Hall, Bandra, Mumbai yesterday (2nd April, 2011).

The following news item appeared in today's HT.

Users oppose Rinfra surcharge
Dharmendra Jore, Hindustan Times
Mumbai, April 03, 2011 

City consumers have opposed Reliance Infrastructure’s demand that consumers who have moved to Tata Power Company (TPC) to avail of low-cost power pay the cross subsidy surcharge.

RInfra wants the surcharge to provide relief to its low-end consumers. The company has the highest number of domestic (below poverty line) consumers who are subsidised by high-end consumers. But, as one lakh high-end consumers have shifted to TPC, RInfra’s subsidy ratio has taken a big hit, which may result in low-end users paying more.

Consumer representatives, presenting their side at a hearing on Saturday on RInfra’s tariff revision petition, blamed RInfra for the crisis. They said consumers who shifted to Tata because of its low tariff should not be forced to pay more for RInfra’s fault.

“RInfra’s spiralling power purchase costs impacted suburban power bills. RInfra had not been prudent in securing long-term inexpensive power,” said MERC-authorised consumer representative Sandeep Ohri, at the hearing conducted by the Maharashtra Electricity Regulatory Commission (MERC).

Ohri said the company had not categorically shown how it would meet the requirement for its 28 lakh consumers from April, 1, 2011, because TPC has completely stopped supplying power.

The Mumbai airport complex that switched to TPC long ago, opposed the cross subsidy surcharge. “We have paid all charges to RInfra before migrating.” The airport is saving more than Rs 10 lakh per month by availing TPC power.

To this, RInfra representative said the company’s requirement had gone down because of the migration of one lakh consumers to TPC and hence it would not hike bills.

RInfra has not sought any hike for 2010-11. Tariff petitions for the current year are yet to be filed. But, the company demanded the cross subsidy surcharge.

Ohri, who made a detailed presentation, also questioned RInfra’s business model. “We have seen Rinfra doing all the wrong things.

Indiscriminate expenses, baseless growth rates, non-transparent functioning, inconsistent statements, unnecessary legal proceedings and a monopolistic attitude are to be blamed for the misery of consumers,” he said.

Some representatives spoke in favour of RInfra. They said the company should be allowed to recover cross subsidy surcharge to discharge its social obligation of providing cheap power to the poor.

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http://www.hindustantimes.com/Users-oppose-RInfra-surcharge/Article1-680707.aspx
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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 :)

MERC appointed me as an Authorised Consumer Rep!!

Guess what?? MERC (on their own) actually appointed me as an Authorised Consumer Representative, under section 94(3) of the Electricity Act 2003 - in a case filed by RINFRA.

I guess with a new Chairman at MERC, the consumers are finally beginning to see light at the end of the tunnel!

Already, we have a choice in Mumbai now... we can chose to move to Tata Power, from RINFRA, BEST or MSEDCL.

Soon this will pave the way for competition in the electricity sector, across India - and the consumer will be able to move freely between electricity providers - very much like telecom providers!

Happy Independence Day :)

MERC has been LYING to the public for SIX years!!

What expectations can you have from an organization that has been LYING to the Public for the last 6 years.

As per the Electricity Act 2003, the Regulatory Commissions (MERC, here in Mah.) are supposed to appoint 'Consumer Representatives' so that these persons (or organisations) can 'represent' consumer interest, in various matters - especially in determining tariff.

Section 94(3) states, "(3) The Appropriate Commission may authorise any person, as it deems fit, to represent the interest of the consumers in the proceedings before it."

MERC has always led us (the public) to believe that the following four agencies have been "authorised by the Commission" under 94(3):
1. Mumbai Grahak Panchayat, Mumbai
2. Prayas Energy Group, Pune
3. Thane Belapur Industries Association, Navi Mumbai
4. Vidharba Industries Association, Nagpur

See MERC's RINFRA Tariff Order issued on 15-Jun-2009, where MERC is stating that hearings were conducted in the presence of 'consumer representatives' authorised under 94(3).

MERC has been allowing ONLY these four to attend and hear the initial, critical technical validation sessions for Tariff fixation - and in fact, for some of the hearings it only allows these four to attend - and does not allow the Public to participate.

On 19-Dec-2003, MERC issued an Order stating that they had appointed these four as Consumer Representatives. There was NO selection, NO invitations from the public, NO systematic methodology for such appointment, NO fixed term, NO responsibilities defined - NOTHING.

MERC just 'hand-picked' these guys ... (I wonder why?) ... and then gave them an 'open-ended' appointment!! There is NO TERMINATION date for these appointments.

I wanted to know more details and so I filed an RTI on 01-Jun-2009 (otherwise they are inclined not to respond) and to my surprise, they replied on 02-Jul-2009 that there has been NO appointment by them under Section 94(3) or under their own Regulation 18 !!

So why has MERC been 'misleading' us to believe that our (consumer) interest is being 'protected' by these 'representatives'!!

These guys could very well be the STOOGES of the electricity companies - and therefore are not really bothered about general consumer interest. No wonder tariff has been continuously rising since 2003 ...

I demand that ALL Tariff Orders issued by MERC, since 2003 be revoked, since due process of law has not been followed. Tariff to be rolled back to the pre-2003 levels.

Most of this happened during the tenure of the earlier Chairman, Dr. Pramod Deo - who is now the Chairman of CERC. The present Chairman, V.P.Raja is, unfortunately, facing all the flak...

Also, see the manner in which MERC has responded to my queries, I know for a fact that certain agencies HAVE applied - and MERC has been silent on this.

How long will you remain silent and continue to let such unscrupulous agencies get away with such blatant lies?

Send an email to MERC and let them know how you feel. Their email ID is mercindia@mercindia.org.in

Tell the present Chairman to reopen ALL the Tariff Orders passed by his predecessor.

THAT's the ONLY way you will get some respite from rising tariff - who knows - you may also get a REFUND!!

My presentation at MERC's hearing

Check this out...
http://www.youtube.com/watch?v=p9E-KdDQ7l0

Its the presentation I made at MERC's Public hearing on Rel Infra's Tariff petition.

Got a copy thru RTI.

Hope this encourages more people to make presentations.

More at http://groups.yahoo.com/group/bijlee

Public Response in Reliance Tariff hike

The response that I will be submitting to Reliance is attached here and here

Go through it so that you may understand the issues we are dealing with. I am not a legal expert and the legal fraternity may excuse my attempt at this :)

Anyway, I have attempted to include all the issues that would affect Residential consumers.

The procedure is thus:

1. Fill in your name, postal address tel/mobile and email ID (before you take prints). Details need to be filled on Page 1, Page 2 and Page 19.

2. Before Thurs, March 19th, make sure one copy is delivered to
Mr. Ramesh Shenoy, Company Secretary
Reliance Infrastructure Limited
Reliance Energy Centre
Santa Cruz (E)
Mumbai 400055

You would need to show proof of service so make 2 copies and get one stamped / acknowledged by their office - or retain Fax/courier slip (in which case you may need to do it at least one day earlier). There is no email provided for Reliance - so that makes it a little more difficult for us! However, I tried sending it to ramesh.shenoy@relianceada.com.

3. Make 6 copies of the submission (actually make 7, you will need one for yourself!) and attach the fax/courier/stamped page on all 6 copies and then send it before Thurs Mar 19th, to
The Secretary
Maharashtra Electricity Regulatory Commission
13th Floor, Centre No. 1, World Trade Centre
Cuffe Parade
Mumbai 400005
Fax: 2216 3976
email: mercindia@mercindia.org.in

To see what really happens, come for the Public Hearing on Thurs Mar 26th at Rangsharda Natya Mandir, Bandra Reclamation, Bandra (W). The hearing starts at 11am.

Let's try and ensure we get justice done !

- Sandeep.

Reliance's Proposed Tariff Hike

I have been going through the Reliance Tariff petition and was trying to find out the increase in electricity charges, since Sep 2006 (the past 30 months). I was surprised with the results and decided to prepare a 'calculator' for Reliance customers to realize how much their tariff has gone up in the past 30 months.

I've uploaded the file here on the Bijlee YahooGroup site and you can sign in to access it (scroll down the list to reach the file "Revised_Reliance_Tariff_Calculator.xls).

All you need to do is input your consumption in the yellow box on the first sheet - and the data will appear as to how much you would have paid at various intervals during this time frame. The dates taken are based on the various tariff orders issued by MERC.

I have included the figure of what would happen, if Reliance's current proposal is approved.

Just to give you a few examples:
1. If your consumption is 100 units - in Sep 2006 you would have paid Rs. 205.29, and (if Reliance's proposal is approved) from Apr 2009, you would be paying Rs. 418.76 - a whopping 104% up in 30 months - and average of almost 42% per year (or 3.5% per month)

2. If your consumption is 400 units - in Sep 2006 you would have paid Rs. 1,577.15, and (if Reliance's proposal is approved) from Apr 2009, you would be paying Rs. 2,923.84 - an increase of 85% in 30 months - and average of approx 34% per year (or nearly 2.9% per month).

Just to put this in perspective, the official Inflation Index for India for FY 2006-07 was 519 and for FY 2008-09 it is 582, which means that as per the Govt. the actual inflation has been around 12% (582/519) for this period.

Also, from Sep 2006 till date, central excise duty has come down from 14% to 8% (down 43%), service tax has come down from 12.36% to 10.3% (down 17%), the price of oil (per barrel) has come down from US$ 63.75 to US$ 41.31 (down 35%) - and yet Reliance has petitioned MERC with an increase that will end up in us paying almost 30% MORE.

I wonder if our disposable incomes went up as much !!

The MERC Public Hearing on Reliance's Tariff Petition is scheduled for Thursday, March 26th at Rangsharda, Bandra Reclamation at 11am. I trust at least a few of you would file a public response opposing the hike (I will be filing one - and you would like to do that, please email me and I send you a copy of what I file).

For those who can't wait - send an email to mercindia@mercindia.org.in - not that they take cognizance of emails - but still 1,000 emails can make a BIG difference - considering that there are about 28 Lakh consumers of Reliance... and don't forget to mark me a copy!

Go ahead and try this - and do send me your feedback at sandeep.ohri@ymail.com (bouquets and brickbats - both will be accepted humbly).

- Sandeep


(Disclaimer: I have tried to make this calculator as accurate as possible - but please try and understand that this is really complex and hey.. who said everyone was perfect!)

Oct 2006-Jul 2008: It's been a long struggle...

It was in October 2006, I used to run a small scale unit in Mumbai and I received my first escalated electricity bill from Reliance Energy.

(For those who came in late... my bill went from Rs. 210 for 11 units to Rs. 10,800 for 14 units!!)

It was then that I woke up and smelt the coffee .. oops .. the mud, about how Reliance Energy had been hoodwinking its consumers.

Ever since then and with the help and guidance of Mr. Rakshpal Abrol (President of the Bombay Small Scale Industries Association) I was made aware of the depths of this bottomless chasm. He warned me of the gravity of the situation, but I was determined to 'do something' - after all this was 'wrong'!!

Since then, I jumped in and ...

... started 'blogging' (this one here and mirrored on Rediff iland and then later also Bijleepower).
... formed (and still Moderate) the Bijlee Yahoo Group
... started an Online Petition for removal of monopoly in Mumbai's electricity supply
... sent out many emails (more in frustration and desperation) to demystify the electricity issue
... participated in public meetings on creating awareness
... became the Moderator of the Electricity section at Karmayog.org
... was hit by threatening Legal Notices by REL
... initially refused to pay their illegal bills (later relented in the interest of feeding my staff)
... initiated a legal battle with REL in the Consumer Court (after they chopped off my electricity)
... made presentations at MERC's public hearings
... was interviewed by TV & newspapers on the issue (some called me 'Power Activist', Ha!)
... made presentations at the Appellate Tribunal for Electricity at New Delhi
... got REL penalised for not turning up at the Tribunal hearing !
... was referred to in many of MERC's Orders. See here (pgs 12/24/25) and here (pgs 39/40)
... and even helped file a case against REL in the Supreme Court

There was a time when people have come up to me and told me, 'Don't take "panga" with the Ambanis.' Well, it was never personal and so I was never 'afraid' ... he is a businessman in his own right and I have my rights as a Consumer.

This journey has by no means ended (hey, life is a journey .. to sound cliched) and things will go on. I have moved on from my small scale unit into a challenging corporate environment. People have become more aware of the electricity situation ... and of their rights ...

And now in July 2008, the Supreme Court has given its verdict on the interpretation of Tata Power's Distribution License .. that Tata Power can also supply electricity to retail consumers in Mumbai.

Thus paving the way, once again, for competition in this sector and giving me a sense of accomplishment-of-sorts.

Sure, we have a long way to go, but I think we have set the ball rolling and now there are enough people who have been made aware of the situation.

Looking back, I have learnt a lot from this experience and the point of this entire blog is that if you feel deep down you are right about something, its worth pursuing (and pursue it like hell).

The results may seem elusive at first and even impossible - but if you are on the right track, the small spark that you carry can actually become a forest fire !

Do not underestimate your own capabilities. When this happened, I was a complete novice (I believe, 'newbie' is the right word ... or is it 'noob'?) in the ways of the Internet - but now I can get myself around.

Don't give up ... Believe in yourself ... Take on the world ... and whether you get the results you desired or not .. YOU will be a different person !!

Cheers !!

End note: It's Guru Purnima on July 18th .. I would like to pay my respects to my Guru, Mr. Rakshpal Abrol, who taught me the ropes in this entire struggle of mine. Sir, with folded hands I pay my humble respect to you. Thank you.

Sleepless Nights ...

Check out the latest post at http://bijleepower.blogspot.com/ on the MERC hearings

" 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 …

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:
http://www.livemint.com/2007/02/06134316/Right-to-information---Private.htx

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....

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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 ...

REL Penalised at ATE hearing !!!

This is with reference to the REL appeal at the Appellate Tribunal of Electricity, New Delhi, to put an additional burden on us of over a 1000 crores...

Well, I attended that hearing.

Here are brief details of what happened ...

As per the Notice issued to us, 3 of us from the Bombay Small Scale Industries Association (BSSIA) and 2 independent consumers turned up on Jan 18th, to protest against REL's proposed hike.

At the hearing, NO other consumer organisation from Mumbai (or anywhere else) turned up.

Though we (and one representative from MERC) were present, the REL counsel, took an adjournment, without our consent, and left !!

However, when we brought this matter to the attention of the Hon'ble Bench, they were gracious and just, to list the matter on Board again the next day and issued orders to all concerned to be present.

On 19th, again, NO other consumer organisation from Mumbai turned up !!

Shameful !!

But, Prayas Energy, (a Pune NGO) showed up and made a representation against the hike (see DNA press report here http://www.dnaindia.com/report.asp?NewsID=1075497 ).

The BSSIA is of the opinion that since REL does not have a License, they have no right to make the appeal, at all.

The REL counsel was asked why no consent was sought from the BSSIA, especially since they themselves had sent a Notice to BSSIA and about 8 other persons to be present on Jan 18th.

REL had no reply to offer and again requested that the matter be adjourned with a short date of Feb 5th, which they had taken earlier.

We all were ready to have discussions (known as "arguing the matter") and so were the MERC counsel and the Prayas representative, but REL did not want to ... and kept insisting on an adjournment, just because some senior counsel of theirs was not available.

What a reason ! Especially when all the others were present to argue the matter. Such gross misuse of the system leads to a waste of time (of the people and the Courts) and public money - which eventually YOU and I will pay for - as part of our electricity bills !!

The Hon'ble Court then penalised REL for calling everyone to Delhi and then asking for another date - consequently, making everyone come again. Though the press report says that BSSIA asked for reimbursement, thats not true.

The Hon'ble Court then awarded all those present (Prayas, BSSIA and other individuals, but not MERC) an amount of Rs. 1 Lakh, as damages.

The Hon'ble Court was very eager to hear the consumers (Thank God .. & the Hon'ble Court !!) and asked for our confirmation for the next date. We requested for a date after Feb 17th and a date of Feb 20th, was agreed upon, by all present.

So, till Feb 20th - this matter is staved off - so we all can breathe a little easy, as the "AEC charges" may not be levied in our next set of bills also.

While we will continue to fight such irresponsible hikes, the important questions are:
- Where did the nominated Mumbai consumer organisation (Mumbai Grahak Panchayat) go ?
- Why didn't they attend ? Especially after being quoted in the Press as having a commitment to protest (see Hindustan Times, dated 14-1-2007)
- They could have submitted a written protest - but didn't - WHY ?
- Why is there no accountability ?
- How does MERC even authorise such entities ?
- What should consumers do when their (supposedly) own representatives do not perform ?

The last question is very important in the perspective that BMC elections are around the corner. (More on this later).

This experience just shows the machinations of large corporations and how they wield their power to manipulate the system.

Sign the online petition for removing this unholy exclusivity and let's pave the way for competition - so that we don't have to deal with this again...Ever ! Do that here: www.petitiononline.com/oct2006/petition.html

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

This information has been posted in good faith, in the interest of
public good, without prejudice.

REL wants you to pay another Rs. 1660 crores !!

Yes, you read that right…!!

If you thought that REL was going to rollback any of the hike levied in October ... think again ..

REL has gone and appealed against MERC, to the Appellate Tribunal of Electricity (ATE) in New Delhi. The hearing is slated for Jan 18th.

Here are the details:

A) In addition to the charges that REL wants us to pay currently, REL has appealed to ATE to “approve” the following additional expenses:

697 cr for Employee Costs
309 cr for Administration & General Exps
175 cr for Income Tax
127 cr for Repairs & Maintenance

Total Rs. 1308 cr

B) If you recall BSES had also given rebates and discounts to a few industrial and commercial users like L&T, TOI, M&M, etc .. well REL wants that Rs. 350 cr back as well.

C) MERC had asked REL to cut down its Transmission & Distribution losses by 0.5% .. from 12.1% to 11.6% .. REL refuses to agree to this also, so you can safely add a few more crores.

So we’re looking down the barrel of the gun…. for at least Rs. 1658 cr (1308+350).

Divide this by the number of consumers (25 lakh) and we get an additional bill of approx Rs. 6,600 per year, in ADDITION to the ridiculously high Oct-Nov-Dec type bills.

MERC had disallowed these amounts and had recorded various reasons for doing this. For instance, MERC did not allow the full income tax amount claimed by REL, as REL is doing other business and they were not able to figure out how much profit was to be ascribed to these other businesses and hence the total Income Tax was not allowed.

Now here are my issues (you knew I had them, didn’t you ?) …

1. The Electricity Act, 2003 states that an appeal can be made within 45 days only, unless there are valid reasons. REL has filed its appeal against the 1-7-2004 Order, on 30-10-2006, nearly two years later ! Why did ATE even admit the matter ?

2. The Electricity Tariff Policy 2006 released by the Government of India on 6-1-2006 states that past losses are not allowed to be carried through, unless they are on account of “uncontrollable factors.” Also, it states that suppliers can charge less than approved rates, as long as they do not claim those discounts/rebates again in their Revenue statements. By this logic, REL cannot charge back this 350 cr – as it was a voluntary discount given by them. There were no “uncontrollable factors” and neither was there any compulsion to offer these discounts.

3. In any case, if 350 cr of “wrong” discounts were given – they should go back to those persons/companies and claim that back only from them – why penalize EVERYONE ?

4. With so much of capital investment planned and done, REL cannot even accept a small reduction in transmission & distribution loss ?? Then why undertake so much of modernization and upgradation ??

REL is flouting all rules and yet is attempting to claim all benefits under the Electricity Act - and it still doesn't have a Licence in its own name - as admitted by MERC again on 19-12-2006 !!

Now, if REL wins this case, you can just about forget trying to “reverse” any of the existing hikes, they will be back with a vengeance to claim higher bills from you and me and the rest of us ...

On behalf of 25 lakh consumers, we are fighting a lone battle against this Goliath .... and are running short of resources ... severely short ...

Can anyone help ??

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

BEST's Electricity Rate hike postponed !!

It was a victory, of sorts, of heightened consumer awareness and consumer participation.

At the Public Hearing held by the MERC on 29-12-2006, the BEST's Aggregate Revenue Requirement (ARR) and Tariff hike for the island-city area, presented by their GM, was withdrawn and POSTPONED to Feb 2007 !

In fact this proposal was not even approved by BEST's own Committee, before presentation to MERC/public for discussion.

In addition Rakshpal Abrol, President, Bombay Small Scale Industries Association (BSSIA), also pointed out that as per section 62 (4) of The Electricity Act, 2003 that governs determination of Tariff, "No Tariff or part of any tariff may ordinarily be amended, more frequently than once in any financial year, except in respect of any changes expressly permitted under the terms of any fuel surcharge formula as may be specified."

And since MERC had already passed a BEST Tariff Order on 9-3-2006, which had been implemented from 1-10-2006, therefore MERC is now not empowered to change the Tariff, within one financial year.

MERC agreed and postponed the ARR & Tariff proposal for 2006-07 and the matter will now only be heard in Feb 2007 where the Tariff will be finalised for a three-year period under the new Multi-Year Tariff principle.

During the hearing 3 of the 4 nominated consumer-oriented organisations were absent and the only other designated Objectors who spoke were Rakshpal Abrol, Kirit Somaiya, Sandeep N. Ohri and Navin M. Shetty.

Incidentally, BEST was incorrectly proposing the Tariff under sections of a repealed Act, which was also pointed out by the BSSIA.

As a result, over 10 lakh consumers in the BEST supply area will now have NO tariff hike.

This is the kind of result that alert consumerism can bring about.

Here's wishing you a safe, peaceful and more AWARE 2007 !!

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

The REL saga continues ...

This is like a bottomless pit !!
It just keeps getting deeper and deeper ... read on ...

1. Reliance's DTH business, BlueMagic, is a subsidiary of REL
By now you all know that the Electricity company needs permission to do other businesses – I wonder if MERC has granted them permission for this.

Here are the weblinks:

http://www.efytimes.com/efytimes/fullnews.asp?edid=5020&magid=

http://www.indiantelevision.com/headlines/y2k6/sep/sep101.htm

2. REL is also into construction of Highways in Tamil Nadu
Again, permission taken from MERC ?

Here is the weblink:

http://economictimes.indiatimes.com/News/CompaniesA-Z/R_Companies_/Reliance_Energy/Reliance_Energy_hits_the_highway_with_2_TN_projects/articleshow/1899084.cms

3. REL has TWO Certificates of Incorporation !

When the name was changed from “Bombay Suburban Electric Supply Limited” to “BSES Limited” on Dec 23, 1992, no separate Certificate of Incorporation was sought from the Registrar of Companies.

But when name was changed from “BSES Limited” to “Reliance Energy Limited” on Feb 24, 2004, a fresh Certificate of Incorporation was sought for - and granted/received.

Why does REL need TWO concurrent Certificates of Incorporation ? Is it allowed by law ?

This information about having two certificates, appears in the Notice of the Court Convened AGM of April 26, 2006 for the Scheme of Amalgamation of REL and Reliance Energy Ventures Ltd.

The pdf file is available here:

http://www.rel.co.in/investorrelations/pdf/CCM_260406_Notice.pdf

So, probably, when it suits them, they say they are incorporated in 1929, and at other times they can say they were incorporated in 2004 - something seems to be really fishy here !

4. Interest Cost on Borrowings is 10% or 0% ?

In the Revenue statement (ARR) submitted by REL, MERC has approved an interest rate of 10% as cost of funds, for funding capital expenditure.

Interestingly, in Nov 2006, REL has completed a ZERO-rate FCCB (Foreign Currency Convertible Bonds) arrangement of US$ 150 million (Rs 750 cr). An FCCB is a Bond (something like a term borrowing) which can be converted into equity after a specified period. ABN AMRO arranged for this and it was placed with 8 US-based financial institutions.

So tell me ... should the interest rate be taken as 10% or 0% ?? If cost of funds is zero, then the ARR submitted to MERC should be revised and the interest should be written back.

In which case, the revenue gap will be lower and REL should charge lower rates for electricity. On one hand, REL is claiming a higher 10% cost of funds and getting electricity rates approved - and on the other, the actual borrowing is at lower rates. Now, I could be wrong here - but then again, think for yourself ...

REL's announcement of this appears on the BSE website here:

http://www.bseindia.com/qresann/news.asp?newsid={0F35078E-6954-494C-BA81-C48C2373AA70}

MERC is still not confirming that REL has a Licence !
We have asked MERC (on Nov 30, 2006) to confirm whether REL had a Licence in their own name - either a fresh one - or the old "Bombay Suburban.." one duly assigned ..

In their reply dated Dec 19, 2006, MERC is silent on both counts .... WHY ?? If REL indeed HAS a Licence, why is MERC not saying so clearly - and putting all speculation to rest ??

REL Group's Double Standards
Interestingly, this same Reliance group is opposing exclusivity in City Gas distribution, yet it is enjoying the benefits of exclusivity in the City Electricity business !!

See that news item here:

http://www.dnaindia.com/report.asp?NewsID=1070380

What to do ??
Well, I think this has gone too far .. and its high time we, consumers, became aware of such transgressions.

My suggestions still remain the same .. let's NOT pay the Bills, which I hope will make all concerned, sit up and rectify these issues.

In any case, since REL does not have the Licence for Mumbai in their own name, they are not empowered by law to disconnect the electricity supply.

I know of one consumer who has NOT paid the REL electricity bill on these very grounds ... for 2 1/2 years .. and REL has not disconnected the supply!!

However, in the long run, its best if this monopoly goes once and for all ..

Please endorse the online petition to remove exclusivity at:

http://petitiononline.com/oct2006/petition.html

In which case, even REL will get an opportunity to do more business in Mumbai - they can sell into Tata, BEST and MSEDCL areas (and vice versa) .. so this is all in the spirit of fair enterprise!

Does anyone have any other ideas on what we should do about this ?? Sign up at NEMESIS-Forum and lets keep this discussion going, till we arrive at something sensible. Send an email to NEMESIS-FORUM-subscribe@yahoogroups.com

Don't become a victim of this injustice !


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

The "AEC" part ...

You & I are going to pay for the discounts given to TOI, L&T, M&M ...

Shocked ?? .. you would be ... Angry ?? .. you should be !!

You must have all heard of the “Additional Energy Charge” (AEC) of Rs. 350 crore that REL wants to charge its consumers, over a period of 6 months, (Oct 06 - Mar 07).

These were for the “incorrect discounts/rebates” that were given by BSES, to “certain categories” of consumers.

Initially, MERC had allowed this, as per their Oct 2006 Tariff Order - but the public outcry forced MERC to ask REL to defer implementation of this AEC and to spread it over 18 months.

Go ahead, check your bill, it says “AEC not included in this bill.”

Incidentally, REL has gone to the Appellate Tribunal to appeal AGAINST MERC, so that it can “recover” this sooner !

Now here’s the fun part (there always is, isn’t there ?) …

It seems these discounts/rebates, were not given to ALL consumers - they were given only to a few consumers – I’ll bet everyone is dying to know WHO were the beneficiaries of BSES’s largesse, well here’s the truth….

1) It seems that from 1992 to Feb 1998, BSES had been selling electricity to the “Western Grid” (areas out of Mumbai) for a lesser rate than their cost of production (at Dahanu). WHY ?? No one knows – in fact, as per terms of Licence to supply, I don’t think they were even supposed to supply electricity outside the Mumbai area.

2) Also, from Feb 1998 to Jun 2004, it seems discounts have been given to many industrial users like Times of India, Larsen & Toubro, Mahindra & Mahindra, ICICI Bank, etc. – just to compete with Tata Power and to gain that additional business.

Consequently, BSES ran up a loss of Rs. 350 crores – which REL wants to recover from you and me and the rest of Mumbai’s unsuspecting, gullible, citizens !!

Sounds pretty unfair, doesn’t it ?? Give discounts to industrial houses - and then recover that from individual users …Ha ! ... "Robbing Paul to pay Peter" ... !!!

If you don't wake up ... very soon you (and I) WILL be paying REL for those discounts ...

Let’s put an END to this injustice …sign the online petition for Removal of Exclusivity in the Supply of Electricity to Mumbai.

Visit http://www.petitiononline.com/oct2006/petition.html ...

No exclusivity …No injustice … na rahega baans, na bajegi baansuri !!

Well … and that’s how I feel …

More SHOCKing - Online Petition created

(The update is at the end of this post)

While the heated discussion on MERC/REL’s unjustified tariff hike in Mumbai, continues .. here’s more food for thought.

Technically, REL may not even be the owner of the "licence" for distributing electricity to Mumbai !!

If this is true, Boy, … what a FRAUD !

Here’s how, read on …

Point 2.5 (Page 24) of the MERC Tariff Order dated 3-10-2006 mentions this issue of actual validity of REL’s "ownership" of the licence.

It seems that the original licencee was the "Bombay Suburban Electric Supply Ltd" This later changed its name to "BSES Ltd" as it probably entered into some broadband / telephony business also.

Now there is a small, but important, technicality here – the old company (Bombay Suburban Electric Supply Ltd) needs to formally apply to the Government for transfer of licence to the new entity (BSES Ltd) – which apparently, DID NOT happen.

REL, please correct me here, if I’m wrong !

Meanwhile, the Reliance group bought over the new entity, BSES Ltd and changed its name to REL – and thereby has claimed that the licence of Mumbai distribution is now automatically with them !

Interestingly, an objection had been raised even in 2004 on this issue, which was dismissed by at that time, as REL had submitted that a "…mere change in name in terms of the provisions of the Companies Act, 1956 has no other legal implication and that, the entity remaining otherwise the same, no fresh issue of the licensee by the Commission is required."

However, this was NOT verified or ratified by MERC.

Now, there are three main points in REL's stand:
1. Mere change in name
2. Provision of the Companies Act
3. Entity otherwise remaining the same

However, a detailed reading of the provisions of the Companies Act, 1956 will tell you that the Act applies to all companies EXCEPT Electricity, Insurance and Banking Companies. Section 616 (c) mentions that in case of any inconsistencies, the provisions of the Electricity Act will prevail.

The Electricity Act has clearly laid down that licence once granted cannot be transferred or sold, without permission.

Also, maybe in 2004, what REL stated may have well been true as it was probably not involved in other businesses.

Today, however, the scenario is very different. REL is admittedly, not a mere distributor of electricity in Mumbai. It has several other interests also, extending to beyond supply of electricity – Mumbai Metro rail, etc.

In view of this the MERC should probably review the situation in a new light and again deliberate whether REL’s status as licencee is really valid or not !!

The reason I am raising this issue is just simple – since REL is trying to show all of us the rule book, someone needs to slam the same book into their face.

After all they are a public entity supplying a basic utility and cannot be expected to be above the purview of the law.

Let us Mumbai consumers benefit from fair competition by ending REL's MONOPOLY.

UPDATE:
I have created an online petition at http://www.petitiononline.com/oct2006/petition.html

This (I hope) will help us address the much larger issue of removal of exclusivity for supply of electricity to Mumbai.

Today it is REL, tomorrow it may be someone else, the issue remains that if EXCLUSIVITY continues, consumers WILL be arm-twisted, so the long term solution lies in removing the exclusivity !

Trust you will agree and sign the petition.

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