In January 2009, Rinfra filed petition before Maharashtra Electricity Regulatory Commission (MERC), seeking approval for increase in electricity tariff. The total revenue gap in FY 10 is Rs.1,376 Crore, which would require an average 23% tariff rise to all the Consumers but RInfra-D proposes to recover only an amount of Rs. 297 Crore during FY 10, which requires an average tariff rise of 5%. The balance un-recovered amount of Rs. 1,079 Crore is being proposed to be deferred to FY 11 & FY 12. With proposed increase, average cost of supply / tariff in Rinfra area would be over Rs. 7.5 / unit for FY 09. Public hearing on this petition was held at Mumbai on 26th March 2009. PEG made detailed analysis and submission to MERC on this petition. This was also presented at the public hearing.

Based on detailed analysis of RInfra petition, the submission highlights causes of such high tariff sought by RInfra, as well as regulatory challenges that arise in regulating a private distribution utility. In this context, the important issues discussed are, the sharp increase in cost of supply (to over Rs.7.5 /unit) on account of improper planning and timely efforts to source power at reasonable cost, over three fold increase in capital expenditure in the recent years (avg. capex of Rs. 407 Cr/year in last 6 years) and large increase in Operations and Maintenance cost which comprises of employee costs and general administration costs. While discussing the regulatory challenges, the submission highlights the impact of Appellate Tribunal for Electricity’s judgments on RInfra appeals against past tariff orders of MERC.  These ATE judgments in the context of RInfra have led to a tariff burden of around Rs.1000 Cr on consumers over the span of 3-4 years. The submission also highlights that the approach adopted by ATE in these judgments negate the state regulator’s authority to ensure efficiency improvement and renders the Multi-year tariff regime / process futile. The term of license of RInfra ends on 15th Aug 2011, the submission also points out the issues related to selection of new licensee and new license and the complications that can arise by creating a regulatory asset by way of un-recovered revenue gap that is proposed to be deferred to FY 11 and FY 12, i.e. beyond the term of current license.