Power bills to shoot up from Sept as MERC doubles FAC cap

Monthly electricity bills of consumers are set to increase from next month with the Maharashtra Electricity Regulatory Commission (MERC) hiking the fuel adjustment cost (FAC) ceiling to 20% from the present 10%.

"...The commission revises the average FAC ceiling to 20% of variable tariff for all distribution licensees in the state," MERC said in its order yesterday. The revised FAC ceiling will come into effect (for the FAC allowable to be charged to consumers) from September onwards.

The Fuel Adjustment Cost is a variable energy rate that can fluctuate each quarter with fuel and purchased power costs of suppliers. The decision is bound to affect monthly budgets of consumers who are already reeling under high tariffs and will now have to factor in the hike.

Suppliers, including Tata Power, RInfra, MSEDCL and BEST, have been claiming that rising fuel cost and earlier ceiling of 10% on passing this burden to consumers have further aggravated their losses.

After analysing the monthly FAC of all utilities, MERC had suo-motu proposed to increase the cap to 25% as it observed under-recovery of the cost in recent past. The state power regulator, however, relented only after the public hue and cry over its decision.

"...The commission has already clarified that there has to be a balance between the interests of the consumers and the utilities and the FAC ceiling has to be stipulated in such a manner that fuel cost incurred by the distribution licensees under normal circumstances is allowed to be passed to the consumers on a regular basis, subject to post-facto approval of MERC and only certain spikes due to steep fluctuations in fuel prices or other developments may not get passed through directly within the ceiling," the order said.

With this revision, the FAC ceiling for Maharashtra State Electricity Distribution Co Ltd (MSEDCL) works out to be at 94.91 paise per killo watt hour (kWh), 99.9 paise for Tata Power, 128.4 paise for RInfra and 144.58 paise for BEST at the prevailing retail tariffs.