COVID-19 effect: Maharashtra government declares an 8% reduction in electricity tariff.

Abhay Shah - April 3, 2020

Electricity

On March 30th, the Maharashtra government declared an average 8 per cent reduction in the electricity tariff over the next five years to enable enterprises and citizens to sail through the COVID-19 crisis. Although the sector has earned the biggest gains, according to an official announcement, farmers would have to endure a 1 per cent drop in electricity prices. It also added that all of the updates are for a five-year term.

For consumers operated in the financial capital by private sector discoms Adani Energy and Tata Power, industrial units would have their power rates cut by 18-20 per cent, commercial establishments by 19-20 per cent and residential ones by 10-11 per cent, it said.

As part of the move, which is the first such initiative in the past 10-15 years, the Maharashtra Electricity Regulatory Commission (MERC) has authorised a plan to slash tariffs by an average of 7-8 per cent, an official statement said.

Maharashtra is the state with the highest number of cases of coronavirus and the decision arrives in the wake of a spate of measures initiated by governments and policymakers to drive economic development in the aftermath of the pandemic. Industrial consumers in the state would enjoy a 10-12 per cent drop in tariffs, except the capital Mumbai, whereas residential consumers will see their rates dropping by 5-7 per cent, it said.

In the banking sector, state-owned BEST tariffs for industrial consumers would drop by 7-8 per cent, while the same would drop by 8-9 per cent for commercial establishments, adding that residential dwellings would have to cope with a 1-2 per cent fall.

MERC Chairman Anand Kulkarni said the decision was made after comprehensive discussions with all the stakeholders and also made it clear that the updated tariffs are not going to be limited to the next one year alone. The Commission has set in place an in-built system whereby the modifications will be valid for five years, an official statement said.

Through this step, Kulkarni said, there would be no pressure on the state exchequer, hoping the electricity distribution firms would be more commercially proactive in supplying power to customers at the lower prices. Kulkarni also appealed to citizens not to misuse power because it is available at cheaper prices.

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