Electricity in Mumbai will likely get costlier as major power supplier Tata Power will revise traffic charges from April 1, 2024. The increase of power tariff for high-end residential users will be in the range of 34-36%. According to Maharashtra Electricity Regulatory Commission (MERC), the decision has raised concerns among experts about the potential migration of residential consumers to alternative utilities like BEST in the island city and Adani Electricity in the suburbs.
According to the Economic Times report, the revised tariff order allows Tata Power to recover an accumulated revenue gap of Rs 1,374 crore from previous years. This results in an average tariff hike of 24% across all categories, with higher increases observed in various residential categories.
According to power expert Ashok Pendse, any hike exceeding 10-20% constitutes a tariff shock, potentially leading to consumer migration to other power utilities. The increase in monthly bills will burden approximately 7.5 lakh consumers, particularly impacting low-end consumers whose bills for a consumption of 300 units may rise from around Rs 2,000 to nearly Rs 2,600.
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For Tata Power's commercial users, including shop owners and offices, the monthly power tariff is set to rise by 38%, posing financial challenges to businessmen. Additionally, the tariff for industry consumers is expected to increase by 30%.
Despite the hike, a Tata Power spokesperson highlighted that the residential tariff for the 0-100 category remains the lowest, and the 101-300 category is only marginally higher compared to other private players. Tata Power affirmed its commitment to providing reliable and quality power supply while optimizing power purchase costs, potentially leading to tariff reductions in the future.
Explaining the rationale behind the tariff hike, MERC Chairman Sanjay Kumar mentioned that Tata Power's under-recovery due to a stay on tariff as determined in the mid-term review order for 2023-24 necessitated the increase. Kumar also noted that if Tata Power had not stayed, the present tariff for 2024-25 would have resulted in a 13% decrease compared to the commission's approved tariff.
During a public hearing last month, citizens expressed opposition to the significant hikes proposed by Tata Power, particularly for low-end users. However, the commission emphasized that the reduction in imported fuel costs from April 2023 to November 2023 has been factored into determining the tariff for 2024-25, reflecting a pass-on of the benefit of reduced fuel prices to consumers.