Regulate power with caution

In its bill dated 19 November, 2004, there was a curious notation inserted by the management of  Reliance Energy Limited (REL) which escaped most consumers:

"As per MERC's order, Delayed payment charges of 2% (on bill amount payable excluding taxes) shall be applicable on payment made upto 1 month after due date and thereafter interest charges at rates stated in tariff order shall be applicable. Please pay by due date to avoid this."  This rule, according to the best information and inference of this author, was implemented by REL from Janauary 2005 itself.

The only concession showed by REL was immediately after the recent floods in Mumbai.  In its recent bill dated 16 August, 2005, REL stated, "Appreciating your need to concentrate on many urgent things to restore normalcy in your daily lives post last month's rains and flooding, we have decided to extend time for you to pay this month's electricity bill. Hence, Delayed Payment Charges (DPC) will not be levied on bills paid within 15 days of the due date printed on your July bill. Interest is applicable on ALL arrears as per clause 10.7 of supply code notified by MERC on 20th Jan '05."

What REL did, and continues to do, is perfectly legal.  It is only implementing a rule that was introduced and ratified by Maharashtra’s Electricity Regulatory Commission (MERC whose rules can be found on its website http://www.mercindia.com/). 

But what is objectionable is the manner in which MERC permitted REL and every other electricity distribution company (discom) to charge this penalty.  The reasons why this is unfair are given below:

·        The MERC appears to be oblivious of the fact that even the Government of India charges a penal interest of just 1% a month.  Even in the days of high interest, the Income Tax Department used to charge a monthly penal interest of 1.5%.  Allowing a penal interest of 2% per month, or 24% annually is as good as permitting usury.

·        The MERC should have clarified that this penal interest (which is in itself very very high) should be payable only on the amounts actually due to the electric supply company and not on assumed or presumed charges.  This is because REL’s staff reads the electricity meters only once in two months.  Thus all consumers get a bill based on assumed consumption of electricity every alternate month. If you happen to be out of town, and haven’t consumed any electricity, and get a bill based on such assumptions, you have to pay 2% on a sum that wasn’t even due to the electric supply company in the first place.  This is absurd!

·        Then there are two specific reasons why REL should not be allowed to charge this penal interest on delayed payments:  

o       It may be recalled, as soon after taking over the erstwhile BSES, REL had tried to collect a deposit equivalent to two/three months of average electricity consumed by each consumer.  Loud protests compelled REL to reduce this deposit amount to just one month of average electricity consumed.  In other words, REL already has an amount equivalent to one month’s consumption with it.  So why the penal interest on the entire bill amount?  Why has the MERC not objected to this practice?

o       True REL pays the consumers an interest of 7% on te money they have deposited with it.  But then consumers are being forced to pay to REL 24% per annum while the company itself pays consumers only 7%.  This is iniquitous.

But why pick on REL along? Take MERC’s approach to all consumers.  It talks about protecting the rights of the electric supply companies, who have the muscle to ensure that MERC hears its petitions.  But there are several areas where MERC has not been sensitive enough to the needs of the common man.

Take one instance:  The best traditions in respect of electric supply in India were laid down by the BEST which is also discom.  It informs consumers before disconnecting power supply.  BSES, which is now REL, does not observe this courtesy.  Consequently, unless you have a UPS in your house, your electrical and electronic goods get switched off abruptly.  If you are using a computer, that’s just too bad!  You may have lost precious data and even damaged your hard disk drive.

Take another instance: When there are power surges or fluctuations, many a consumer haplessly watches his TV set burnt out, or his bulbs getting fused, or his ‘fridge not working any more. Shouldn’t the consumer have the right to be compensated by the electric supply company for not providing electricity according to the service level agreements insisted upon by the MERC.  The Commission is silent on this issue. 

I guess it will require consumer activist to take this matter up with consumer courts for fresh directions on compensation due for unannounced power cuts and for unacceptable power surges/fluctuations.

Finally, there is also the issue of tariffs that non-commercial consumers should be asked to pay.  But that is another issue that may have to be dealt with separately.