Tariff hike : Power 'shock' or an 'eyeopener'

The recent tariff hike by Mumbai utilities especially Reliance Infrastructure Ltd. and BEST led to violent protests by people across Mumbai distribution area who on the behest of some political parties went on rampage destroying public property and bringing total chaos. But we need to ask ourselves that are these protests justified and that too in the manner in which these protests are 'organised'( to serve the political ambitions). From a consumer point of view, the protest is justified as this steep tariff hike is going to create a big hole in his pocket. But this tariff hike was inevitable due to variety of factors and so we should understand the rationale behind this.

First and the foremost thing is that we should understand the power scenario in India . In India, due to generation-demand mismatch , the power is sold on higher rates and as a result the distribution utilities are bound to pass this heat on the consumers.Now,in case of Mumbai, which enjoys zero load-shedding status on account of being the commercial capital, the gap between demand and supply is huge and so the mumbai utilities have to pay a higher price in order to meet the shortfall of power. And obviously the higher cost of power is to be borne by consumers. So this was one of the important reason for the price hike.

But who is responsible for this supply-demand gap which is responsible for purchase of costly power? Its the apathy shown by the government towards the power sector and lack of foresightedness which is responsible for the grim situation in which the state has been pushed by the so called 'visionary' leaders. In the last few years , practically no or negligible generation has been added in the state while the demand has continuously increased and this also includes the regime of the political parties which are spearheading the protests to further their own ambitions. And the most ironical part is that common man is taken for a ride by these parties who are just organizing protests to further their political goals .These agitations have more political tones with assembly elections approaching which is not going to solve this critical problem unless and until we try to find the out the root cause of the problem.

And the main cause is the huge gap between demand and supply. So the government will have to take extra-ordinary efforts to invite investments for adding new generating capacity in the state. Also the govt. should expedite the process of acquring land for the power projects which are on hold due to this land acquisition problem.

Also the following steps, if taken, will be instrumental in reducing the demand-supply gap which in turn will bring the much needed respite to the consumers in the form of economical power:

1) Mumbai should be allocated share in the central generating stations(CGS).
2) Mumbai should be allowed to draw from UI pool when the grid frequency is good and the power is available at cheaper rate.
3) The existing generation capacities should be expanded ( wherever possible) to meet the ever increasing demand as augmenting the capacity of existing power plant is less time consuming than installing in a new power plant.
4) The generation companies in Mumbai having surplus power should not be allowed to sell the power outside Mumbai when the city is reeling under severe power crisis. The sale of power should be allowed only when Mumbai is self-sufficient to meet its demand.
5) The CERC should put a tab on the prices of power purchased from the open market as this will curb the volatility of the prices.
6) All subsidies on power should be done away with as people will judiciously use power only when the pay the true power cost and not the subsidised one.


Also many people have this wrong notion that the utilities are responsible for effecting this steep hike which is not true. The electricity business is a highly regulated business and the utilities can not hike the tariff as per their whims and fancies. These prices are hiked by regulatory commissions which in our case is MERC.

So as an informed citizen , it should be our moral obligation to ask our leaders and representatives that what they have been doing all these years. We should refrain from falling prey to their ideas of adopting violent means to protest the tariff hike as that will only aggravate the problem instead of solving it.
Remember these protests are just poll gimmicks to futher their polictical ambitions and a face saving formula to hide their failures in adding new generation capacities in the state.