Reliance Infrastructure Limited – Distribution Business (RInfra-D) has filed a Petition for approval of Multi-Year Tariff (MYT) for the period from FY 2012-13 to FY 2015-16 in accordance with MERC (Multi Year Tariff) Regulations, 2011. The Commission has passed an Order on November 23, 2012 approving the MYT Business Plan for RInfra-D in Case No. 158 of 2011 for the second Control Period from FY 2012-13 to FY 2015-16. There is significant difference in the figures approved by the commission under case no 158 of 2011 and the present MYT petition. Most crucial parameters such as sales, energy balance and power purchase related expenses itself vary from business plan estimates. The whole idea behind forecasting based on business plan was to avoid such deviations. Further the differences in sales projection have a direct impact on calculations pertaining to cross-subsidy surcharge and in case of Mumbai distribution, the commission should have conducted the MYT process for Tata and RInfra simultaneously so as to give consumers a complete picture and avoid confusion. Especially for changeover and switch over consumer sales, there should have been similar methodology for projection and consistency in these estimates should have been achieved at technical validation stage itself.
Submission made by Prayas in this matter can be downloaded using the link below. The main purpose behind initiating MYT framework was to encourage good planning practices and ensure efficiency improvements so as to have better control on costs. But in reality MYT regime has failed to control any costs and the present petition is a case in point. Most notably in the areas such as capital expenditure and operations and maintenance, which can be certainly planned and controlled to achieve efficiency improvements, the utilities have always claimed very high expenses than the approved estimates. Even within a small gap of three months between the order approving business plan and this MYT petition, the petitioner has doubled O&M expenses and estimated increase on almost all major cost heads rendering the business plan approval process entirely meaningless. This is tantamount to mockery of not just the MYT regulations but regulatory process itself and does not induce any confidence in the minds of consumers; in fact it leaves them more confused than being confident about its usefulness. This we believe is the gravest concern emerging from this petition.