The Appellate Tribunal for Electricity (APTEL) has dismissed Brihanmumbai Electric Supply and Transport Undertaking’s (BEST) appeal challenging the Maharashtra Electricity Regulatory Commission’s (MERC) order permitting Tata Power Company (TPCL) to implement a phased rollout of its distribution network in Mumbai.

The Tribunal upheld MERC’s June 12, 2017, order, which allowed TPCL to expand its distribution infrastructure in overlapping areas with BEST over a seven-year period in two phases.

It held that the phased network development does not violate the Electricity Act or the conditions of TPCL’s distribution licence.

APTEL also rejected BEST’s concerns regarding consumer migration, cherry-picking of high-paying consumers, and operational issues.

Background

The dispute arises from MERC’s decision to grant TPCL a 25-year distribution licence, allowing it to supply electricity in parts of Mumbai where BEST already operates as the distribution licensee.

Subsequently, TPCL submitted a network rollout plan for building its distribution infrastructure in areas overlapping with BEST’s supply area. MERC approved a phased development plan, allowing TPCL to gradually expand its network rather than build the entire system immediately.

BEST challenged the Commission’s decision, arguing that the seven-year phased rollout violated the regulations of the Electricity Act. BEST also claimed that this would allow TPCL to selectively target high-paying consumers, creating an uneven playing field.

It also raised concerns about the consumer migration protocol, including the short timeline for sharing consumer information and the possibility of stranded assets if consumers shifted to Tata Power.

TPCL contended that a phased network development approach is practical and cost-effective, especially given Mumbai’s space constraints and infrastructure challenges.

Tribunal’s Analysis

After considering the submissions, APTEL observed that the Electricity Act requires distribution licensees to progressively develop and maintain an efficient distribution system and does not mandate that the entire network be built at once.

It held that phased development of the distribution network is consistent with the Electricity Act, which allows infrastructure expansion in stages based on demand and operational requirements.

APTEL also agreed with MERC’s methodology of dividing the rollout into two phases:

• Phase I: Expansion of downstream networks from TPCL’s existing substations and infrastructure.
• Phase II: Establishment of new substations and network elements in areas where the company currently has no infrastructure.

APTEL noted that TPCL has substantially rolled out its network and that no deficiencies in the rollout plan have been pointed out by MERC.

It said TPCL has already substantially implemented the rollout plan, completing Phase I and most of Phase II network development by 2025. Given this progress, the issues raised in the appeal had lost their practical relevance.

APTEL observed that BEST’s contention that phased development of the distribution network would result in cherry-picking by TPCL is misconceived.

On the issue of consumer migration and alleged selection of high-end consumers, APTEL emphasized that no specific instances of cherry-picking have been indicated on behalf of BEST, and only a general reference has been made to the effect that such phased development would lead to cherry-picking.

APTEL ruled that the duplication of networks in overlapping licence areas is inevitable, thereby permitting multiple distribution licensees in the same area to promote competition.

In January this year, MERC approved tariffs ranging from ₹4.43 (~$0.049)/kWh to ₹4.77 (~$0.05)/kWh for Tata Power’s 250 MW of firm and dispatchable renewable energy projects with energy storage systems.

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