In its petition for the third control period, Tata Power Company Limited – Distribution (TPC-D) has claimed a past revenue gap of Rs. 816 crore along with unrecovered regulatory asset of Rs. 570 crore. This is in addition to the aggregate revenue requirement, which increases from Rs. 2991 crore in 2016-17 to Rs. 4037 crore in 2019-10. These amounts would be recovered over the next four years.
Operationalization of parallel license mechanism in Mumbai brought in new hope and significantly piqued interest in a city that was reeling under high tariffs. It also set high expectations for efficiency improvement and better planning, as it was felt that competition would help counter the incentive for overspending inherent in a ‘cost-plus’ tariff approach. However, nothing of the subsequent Mumbai experience met these expectations. Instead, the story of parallel licensing in Mumbai is one of consistent planning failures, litigious utilities, ineffective regulation and tariff- burdened consumers.
This submission brings out the key issues in planning and regulation that are at the root of these failures and which continue to remain unaddressed. It argues that so long as the regulator fails to ensure proper power purchase planning and continues to assure full recovery (with carrying cost) for all expenses claimed by the licensees; the consumers will continue to bear the burden of high tariffs, in spite of competition and in spite of technical and commercial losses being low.
Here is a link to our submission in case of Reliance Infrastructure Limited (Distribution business), which is the other competing licensee in the Mumbai area. Past submission regarding issues pertaining to Mumbai power sector can be downloaded from here.