Maharashtra State Distribution Company Ltd (MSEDCL) filed a petition for final true-up for FY 2011-12 and FY 2012-13, allowing carrying cost on deferred approvals, and interim relief. A public notice in this regard was issued on 7th February 2014 and a public hearing was scheduled on 28th February, only in Mumbai at the Commission's office.  

Through the said petition, MSEDCL is seeking approval for revenue gap of Rs. 9312 Crore. Out of this amount, Rs. 1051 Cr are towards carrying costs for amounts pertaining to orders dating from the year 2008. In the intervening period several tariff revisions have happened and it is not clear as to how and why such costs have not been recovered in subsequent periods. No explanation has been provided in this regard. Apart from this, Carrying Cost of Rs. 1,317 crores on True Up of FY 2011-12 and 2012-13. This amount is being included, in spite of the fact that the petitioner is filing a true-up petition for these years only now in February 2014 whereas, as per the tariff regulations, such petition should have been filed in November 2012. The Commission has suo-motu powers which could have used to undertake timely tariff revision. However, both MSEDCL and MERC avoided this issue and still, the cost of this delay is atte,mpted to be recovered from the consumers.

In the past, MERC has shown a strong commitment to transparency and public participation. It is a routine procedure to undertake Technical validation session (TVS) in the presence of all the authorized consumer representatives for all tariff related matters. The main purpose of the TVS is to scrutinize completeness of the petition, so that it can facilitate an effective and informed public process. All the previous tariff orders of MSEDCL, as well as other licensees, highlight the important contribution of TVS in improving the petition and hence the public discourse.

However, in this present matter (case no 38 of 2014) regarding MSEDCL tariff proposal, the Commission chose to abandon both of these good practices. In absence of a thorough scrutiny, there is a lack of clarity regarding the petitioner’s overall approach towards tariff review process and uncertainty about appropriateness of costs to the extent of Rs.4075 crores, which accounts for more than 40% of the revenue gap proposed to be recovered from the consumers. Hence, as such it is inappropriate and meaningless to solicit public comments in a tariff process based on such a proposal.

In light of these serious governance issues, procedural lapses and major lacunae in the petition, it is not possible to rationally arrive at any tariff related decisions. Hence it is not possible to meaningfully engage in the present process and as a protest, we are not making any submissions regarding merits of the proposal. We demanded to the commission to set aside the present petition and undertake a fresh process which should include a proper technical validation session and public hearings at all the six revenue headquarters.