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MERC provides details of cross subsidy surcharge for customers
that migrated from RELI to TPWR: The Maharashtra Electricity
Regulatory Commission has put forth the following cross-subsidy
surcharge (CSS) for consumers migrating from Reliance Infra to Tata
Power. The CSS was in-principle agreed to last month by MERC, but
the exact charges have been notified now. CSS applicable: (1) For high
tension (mainly industrial users): Rs0.26 to Rs2.79/unit (2) For lowtension
(commercial, small industries): Rs0.84 to Rs1.9/unit, (3) for
residential with single phase connections >500units/month consumption
Rs0.03/unit and (4) residential consuming <500 units/month: zero.
CSS not a game changer for migrated residential and other new
customers, but migrated industrial/commercial consumers will be
impacted. In our view, the charges notified are negligible and would
not stymie TPWR’s distribution foray, at least for residential consumers.
Also we note that for new customers (say a new commercial
establishment or mall or residential complex) who are not being poached
from RELI, there is no CSS, and TPWR can still compete with RELI on
the basis of lower cost of supply. However, for migrating industrial /
commercial consumers, the high CSS is a meaningful deterrent in our
view.
Rationale for the CSS: Distcom losses could mount if the most
profitable consumers are weaned away either by group captives or open
access to cheaper generators, who were, until recently, not subject to any
‘universal service obligation’. The CSS is meant to mitigate potential
losses arising from migration, as well as enforce an USO. Tata Power
began attracting RELI consumers around 18 months back and currently
has a distribution demand of ~800MW (around 55% of RELI’s demand).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
MERC provides details of cross subsidy surcharge for customers
that migrated from RELI to TPWR: The Maharashtra Electricity
Regulatory Commission has put forth the following cross-subsidy
surcharge (CSS) for consumers migrating from Reliance Infra to Tata
Power. The CSS was in-principle agreed to last month by MERC, but
the exact charges have been notified now. CSS applicable: (1) For high
tension (mainly industrial users): Rs0.26 to Rs2.79/unit (2) For lowtension
(commercial, small industries): Rs0.84 to Rs1.9/unit, (3) for
residential with single phase connections >500units/month consumption
Rs0.03/unit and (4) residential consuming <500 units/month: zero.
CSS not a game changer for migrated residential and other new
customers, but migrated industrial/commercial consumers will be
impacted. In our view, the charges notified are negligible and would
not stymie TPWR’s distribution foray, at least for residential consumers.
Also we note that for new customers (say a new commercial
establishment or mall or residential complex) who are not being poached
from RELI, there is no CSS, and TPWR can still compete with RELI on
the basis of lower cost of supply. However, for migrating industrial /
commercial consumers, the high CSS is a meaningful deterrent in our
view.
Rationale for the CSS: Distcom losses could mount if the most
profitable consumers are weaned away either by group captives or open
access to cheaper generators, who were, until recently, not subject to any
‘universal service obligation’. The CSS is meant to mitigate potential
losses arising from migration, as well as enforce an USO. Tata Power
began attracting RELI consumers around 18 months back and currently
has a distribution demand of ~800MW (around 55% of RELI’s demand).
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