MSEB queries MERC order against Enron

MSEB queries MERC order against Enron
Vinu Lal

September 3: The Maharashtra State Electricity Board (MSEB) in its review petition filed against an order passed by the Maharashtra Electricity Regulation Commission (MERC), has questioned whether the commission has the power to change a contract signed with an independent power producer, in this case Enron. The appeal, filed before the commission a month ago and which came up for hearing on August 29, states that the board should be allowed to purchase 4,200 million units from Enron for around Rs 2,000 crore for the year 2000-2001.

The newly formed MERC, a quasi-judicial body set up to rationalise power tariffs in the state, had in May issued an order restricting power purchase from private parties, mainly Enron. Against a requirement of 4,200 million units from Dabhol, the commission had restricted pruchases to just 1,100 units, which reduced the power bill to Enron by Rs 370 crore.

In a separate development during the August 29 hearing, some consumer organisations drew the commission's attention to the fact that state Power Minister Dr Padamsinh Patil can be prosecuted under Section 44 of the Electricity Regulatory Commission Act, 1999, for allegedly violating an order of the commission. The minister had instructed the board that agricultural and powerloom consumers should not be ``forced'' to pay their arrears as per the increased tariff fixed by the commission. A spokesperson from a consumer organisation told Newsline that they now plan to file a separate petition before the commission against the state government citing Section 44 of the ERC Act.

Interestingly, last week's hearing was to justify the review petition filed by the board against the verdict. This follows a technical objection petition filed by the Mumbai Grahak Panchayat and several others questioning the board's right to challenge the final order under Rule 87 of the ERC Act. The commission is yet to issue an order in this matter, which is expected this week. Sources, however, indicate that the commission may allow the board to go ahead with the review petition.

In fact, the board too in its review petition, has demanded that the increased rates applicable for agricultural and powerloom consumers should be withdrawn. Though the board has not made it clear how to recover this shortfall in revenue, the implication is that this shortfall should be adjusted as a hike in industrial tariffs. In the order, the commission had brought down tariffs for select industrial consumers.

The commission has observed that the board is losing revenue as higher purchases from Enron and as per the latest figures available with the commission, the cost of power per unit from Enron is shown as Rs 5.60. Considering this, MERC had observed that the board should follow the merit order purchase method, by which a state electricity board can purchase power from private parties with preference given to low cost suppliers.

Meanwhile, Pradyumna Kaul, an energy analyst, pointed out that at today's rates, power from Enron would cost Rs 6.50 considering the naphtha rates of 32 dollars per barrel and massive rupee devaluation. ``The state government should be advocating for lesser consumption from Enron instead of clamouring for lesser rates for farmers and powerloom consumers, Kaul states.