Energy

Political Cracks Appear at Maharashtra's Power Regulator as Two Members Step Aside

Two members of MERC have recused themselves from all fresh hearings over political pressure and differences with current chairman Anand Kulkarni.

Workers install new power lines on an electric pole on the outskirts of Ajmer, India, February 20, 2017. Credit: Reuters/Himanshu Sharma/Files

Workers install new power lines on an electric pole on the outskirts of Ajmer, India, February 20, 2017. Credit: Reuters/Himanshu Sharma/Files

New Delhi: Two members of the Maharashtra Electricity Regulatory Commission (MERC) have recused themselves from all fresh hearings in quick succession, plunging the watchdog into a human resource crisis at a time when the annual tariff petitions of power companies are lying before the regulator for examination.

According to people with knowledge of the matter, MERC members Azeez Mehdi Khan and Deepak Lad will no longer participate in any fresh hearings.

The recusals, sources say, appear to have been made under pressure from the Maharashtra government which was reportedly unhappy over the refusal of these two functionaries to toe the political line on issues such as tariff hike.

The trouble started in May this year when Khan, who was acting chairman, was replaced by the state government with Anand Kulkarni. As The Wire reported on December 19, Khan recused himself from all fresh hearings on November 30. Lad has now followed in Khan’s footsteps in stepping down from fresh hearings,  with a resolution being passed by the MERC to this effect.

Normally, judicial authorities or adjudicating officers recuse themselves from hearing of a particular case only when there is a conflict of interest. However, no such reason has been furnished in either case.

India’s state electricity regulatory commissions are staffed with a chairperson and two members in addition to other employees. One member is supposed to have technical expertise, while the other usually comes from an economics background. Before joining the IAS, Khan was a lecturer in economics at Mumbai’s Elphinstone College. Lad was director (technical) in Maharashtra State Electricity Distribution Company before he joined the MERC in August 2014.

There is no third member in the MERC who could be involved in hearing of fresh cases. There is a secretary but he is not supposed to hear cases. So, now chairman Kulkarni alone will have to hear all fresh cases. That could impact quality of orders, said experts.

The timing of recusals indicates that there is pressure on the MERC to toe the government line while deciding on tariff revision petitions.

People with knowledge of the matter also told The Wire that the state government installed Kulkarni as the chairman as it was unhappy with Khan, who tended to act independently and refused to pay heed to its directions on tariff hikes. Kulkarni is three year junior to Khan. Kulkarni is a 1982 batch IAS officer while Khan had joined the administrative services in 1979.

However, when contacted, Khan told The Wire that he has a lot of pending work, which he wants to complete before he retires in May next year. Lad, when contacted, corroborated Khan’s version.

Power subsidies

Across India, power subsidies are often a tool for political parties, with state governments tending to fill electricity regulatory commission with loyal bureaucrats so that tariff hike decisions can be pushed through easily. This trend has frustrated the Centre, which has tried to push states on the path of power reform.

This issue was highlighted by the 2010  V. K. Shunglu committee – which was set up by the UPA government to examine factors impacting the health of state electricity boards. The committee not only recommended that regulatory commissions be insulated against interference by state government but also suggested that the chief justice of the high court of the concerned state and chairman of the central electricity regulatory commission should be part of the panel formed to select chiefs of state electricity watchdogs. However, the recommendations are yet to be implemented.

The cumulative losses of discoms had shot to nearly Rs 2 lakh crore at the end of September 2012. The UPA government at the time had to bring a package to bail out discoms at the verge of a financial collapse.

But within less than three years, discoms have again slipped into bankruptcy. The combined losses of all discoms jumped to Rs 4.3 lakh crore as at the end of September 2015, forcing the new NDA government to pilot another bail-out package for them.  After availing the financial package, discoms have again slipped to their old ways on the implementation of power reforms.

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