Bombay Suburban Electricity and Transport (BEST) on Friday in Mumbai hinted at an increase in its electricity tariff, for its low-end residential customers, to recover the loss it would suffer for losing its high-end consumers to Tata Power.

The development comes a day after the Supreme Court dismissed BEST's petition against Tata Power's bid to enter its network area in the southern parts of the city.

"The Supreme Court order allows Tata Power to supply electricity in our network area, but since it does not have its own distribution infrastructure here, it will not have a major impact on us.

"However, this could impact low-end consumers who consume up to 300 units, since their tariff may have to be hiked to recover the financial impact due to a possible switch-over," BEST General Manager O P Gupta said during a committee meeting here.

The Supreme Court had recently dismissed a petition filed by the Brihanmumbai Municipal Corporation (BMC)-owned BEST objecting to Tata Power's bid to enter its distribution area.

At present, BEST has 10 lakh consumers, out of which 6.56 lakh consume up to 300 units.

"High-end residential and commercial consumers are likely to switch over to the Tatas, as their rates are cheaper than ours.

"If this happens, it will negatively impact our business plans approved by the Maharashtra Electricity Regulatory Committee (MERC) for FY16. Since this will impact our revenue, we will have to increase tariff for low-end consumers, to compensate for the loss of high-end consumers," Gupta said.

Presently, BEST charges Rs 3.85 per unit for customers consuming up to 100 units and Rs 7.11 for those consuming up to 300 units of electricity. 

BEST charges Rs 9.99 per unit for those consuming up to 500 units and Rs 12.94 for those consuming above 500 units.

Gupta said that since BEST's electricity business cross – subsidies its transport business, the switchover would have a severe impact on the latter.

"Tata Power's entry poses a threat to BEST as it will not only impact our power distribution business but also our transport vertical, because it cross-subsidies the latter. Now MERC would have to approve a revised tariff plan which we will have to submit to cross-subsidise our transport business," he said.

The BEST committee will meet on May 19 to take a final decision on the tariff.

In its petition, BEST had argued that since it is a local authority, no persons situated in its area of supply could avail electricity from any other licensee, and that TPC could not extend its network in BEST's area of supply, without the latter's consent and agreement.

In its recent order, the Supreme Court dismissed BEST's petition against TPC's bid to enter its distribution area and observed, "…it becomes clear that there is no exemption from universal service obligation to any distribution licensee under the Electricity Act, on account of the presence of a "local authority" as a distribution licensee in the particular area of supply.

The National Electricity Policy clearly states that the second licensee in the same area shall have the obligation to supply to all consumers in accordance with the Act".

It further said, "It is, therefore, difficult to accept the extreme position taken by the appellant (BEST) that if the local authority is a distribution licensee in a particular area, there cannot be any other distribution licensee in that area without permission of such a local authority.

"Not only such a contention would negate the effect of universal supply obligation under the Act, it will also amount to providing an exception which is not there either in Section 43 or Section 14 of the Act, namely to treat local authority in a special category and by giving it the benefit, even that benefit which is not specified under the Act."