MSEDCL's franchisee model is illegal: Experts
Anjaya AnparthiAnjaya Anparthi | Sep 18, 2011

NAGPUR: Power consumers' representatives have come out in protest against MSEDCL's power distribution franchisee model and dug out various flaws in the model. RB Goenka of the Vidarbha Industries Association (VIA) claimed that MSEDCL's franchisee model was illegal as the franchisee was effectively acting as a power trader without a license.

The Maharashtra Electricity Regulatory Commission (MERC) had held an admissibility hearing on two petitions, including one filed by Pratap Hogade, the president of the Maharashtra Rajya Veej Grahak Sanghatna, on Thursday.

Goenka said in the hearing that as per section 2 (27) of Electricity Act 2003, the franchisee means a person authorized by a distribution licensee to distribute electricity on its behalf in a particular area within his area of supply. Besides, section 61 (b), (c), (d), section 62 (1), section 86 (1) (a), (b) and (j) states that franchisee is appointed by the licensee for distribution of electricity and may not act as a trader. For trading of electricity, a separate license is required.

Under MSEDCL's franchisee model, the utility is selling power to private company appointed as franchisee at cheaper rates which are not decided by the Commission at the terms and conditions decided by the licensee. Such a power is not vested in licensee and only the Commission has powers to decide bulk power supply rates on commercial principles as per section 61 and 62 of the Act. Even for trading activity, the trading margins are to be decided by the Commission.

Goenka further pointed out that no public hearing was conducted before deciding the rates and terms and conditions for selling of power to the franchisee. "MSEDCL fixed the rates on its own without looking into the facts which it is not authorized to do," he said.

"Process should have been routed through the Commission in a transparent manner after due public hearing looking into commercial benefits to the licensee and ultimately to the consumers. Therefore, the Commission should take a serious cognisance of the facts and steps to protect consumers' interests," he said.

Hogade, Shantanu Dixit from Prayas and Thane-Belapur Industries Association slammed MSEDCL for having no control on franchisees of Nagpur and Aurangabad that left citizens to face power cuts for three-four days. They said that MERC held a suo motu hearing when power was interrupted for two-three hours in Mumbai. Unfortunately, this was not done when citizens in Nagpur and Aurangabad suffer power cut for hours as MSEDCL had not brought franchisee model under MERC's purview. They requested the Commission to scrutinize the agreement signed between MSEDCL and franchisees and revise the model.