Suburban Mumbai dwellers, faced with either power cuts or high power tariffs due to the stand-off between producer Tata Power Corp (TPC) and distributor Reliance Infrastructure (R-Infra), may be spared both options, as the Maharashtra government has sent a stern letter to TPC asking it to maintain power supply at the current rates.

In the letter, the state government asked TPC to ease its stand on conditional supply of power to R-Infra. The letter comes a day after chief minister Ashok Chavan said he would ensure that there would neither be power cuts nor a hike in tariff.

"We have told TPC that this is an extraordinary situation of power shortage. They should follow our two principles of electricity: not to be supplied outside Mumbai; and sell it at the regulated price. If there are any other issues, apart from these two points, then we are interested in talking," said state energy secretary Subratho Ratho.

On Thursday, TPC said it would sell 200 MW to R-Infra, but at Rs5.90 per unit instead of the current rate of Rs3.50 per unit.

When asked what action the state would take if TPC does not follow its diktat, Ratho said: "We don't want to precipitate the issue. Whether or not Tata Power follows our request is hypothetical as we believe that it can be solved amicably and they would heed our request."

Tata Power said it was not aware of any letter by the government. "We left our offices at 7.30 pm and till that time we didn't receive any letter from the state government. We might receive it tomorrow. As of now our stand remains the same," said S Padmanabhan, executive director (operations), TPC.

R-Infra's daily need is 1,735 MW, of which 358 MW (over 20 per cent) comes from TPC, as per an old arrangement. However, TPC says it can no longer honour the agreement in the absence of a power purchase agreement (PPA).

The TPC also gave R-Infra a deadline of 17 May to accept the offer, failing which it plans to divert the 200 MW to its other consumers or sell in the open market.

The controversy began following the Maharashtra Electricity Regulatory Commission's directive that R-Infra and TPC should have a power purchase agreement. Following disputes between the two utilities over various issues, TPC said it would not be able to supply power to R-Infra as its own consumer base was growing.
 
State government officials reportedly said the state would not hesitate to "arm-twist" TPC if "better sense in a matter of utmost public interest" did not prevail.
 
The government had directed the TPC to supply 358 MW to R-Infra till 1 July. After that, it could withdraw 160 MW from that supply for its own consumers and give the remaining to R-Infra till 31 March 2011. But now, the government has told TPC that instead of 1 July, it could start withdrawing 160 MW for its own consumers from Sunday night, but have to supply 198 MW to R-Infra at a cheaper rate than the market rate till 31 March 2011.

"TPC, being a public-oriented corporate, will accept our request to continue supplying 198 MW power to R-Infra's 27 lakh suburban consumers at a cheaper rate. TPC should not use its legally dominant position only to gain profits for a few months, as R-Infra has promised to arrange for cheaper electricity for its suburban consumers," the letter to TPC read.

However, the letter did not say how it would enforce the state's diktat.

Till Friday evening, TPC also denied receiving any notice from the state government.

"It is not that TPC has to budge from its stand, R-Infra did make a mistake. But, in the interest of consumers, they have to forget their differences for a few months," The Times of India quoted an unnamed "highly influential minister in the DF government in the cabinet sub-committee on power" as saying. Officials, taking a cue from the minister, ruled out any immediate hike in tariff or threat of load-shedding for suburban power consumers.

TPC has denied any chance of load-shedding in suburbs, saying the power would remain in Mumbai and that R-Infra has to decided whether to buy it at market rate or get it from the open market.