Financial Daily from THE HINDU group of publications
Friday, Sep 17, 2004
Corporate - Corporate Disputes
Industry & Economy - Power
Dispute over standby charges HC tells Reliance Energy, Tata Power to talk it over
Mumbai , Sept. 16
THE Bombay High Court on Thursday directed top managements of Tata Power Company (TPC) and Reliance Energy Ltd (REL) to sit together and work out a mutually acceptable solution on their standby charges dispute.
The High Court has given the companies a week's time to decide on the solution. The next hearing is scheduled on September 23.
The standby charges are payable to the Maharashtra State Electricity Board (MSEB) towards making available a back-up or reserve power pool for Mumbai in case of any fault in the city's power distribution system.
While TPC avails standby from the MSEB, REL, which buys power from the former, benefits indirectly.
The High Court acknowledged that since the dispute is a technical one, it would be appropriate that both companies find a solution through discussions.
The dispute about the proportion in which TPC and REL should share the charges payable to the MSEB has been pending for years.
In the last few years, both companies had contested almost every decision passed by the Maharashtra Electricity Regulatory Commission (MERC), High Court and the Supreme Court on the proportion in which both parties should share the standby charges.
While TPC has insisted that both the private sector power distribution companies share the charges equally, REL has stuck to its stand that it should bear only 23 per cent of the amount payable.
The MERC had, in its June 2004 order, had asked TPC to pay 77-79 per cent of the standby charges while REL was to pay 21-23 per cent of the amount payable to the MSEB.
The commission had also ordered that TPC refund REL excess standby charges of Rs 322 crore.
However, it has been TPC's claim that the Government of Maharashtra, Bombay High Court and the Supreme Court had earlier agreed that standby capacity be shared equally between the two companies.
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