The Appellate Tribunal for Electricity (ATE) dismissed Tata Power's petition challenging the Maharashtra electricity regulator's order on imposing cross subsidy surcharge on high-end consumers who migrated from R-Infra to Tata Power.

The Maharashtra Electricity Regulator Commission (MERC) has ruled in September last year that if high-billing customers move from one supplier to another under open access system, they would have to keep on cross subsidizing their previous supplier's lower-end consumers.

Tata Power had challenged MERC's order that allowed Anil Ambani's R-Infra to collect cross-subsidy surcharge from its high-end consumers who had migrated to rival firm Tata Power.

The ATE stressed that reasonable subsidy was necessary to prevent Tata Power from creating a monopoly in the market.

In its ruling, the appellate body said, "This action of imposing cross subsidy surcharge is to preserve the competition in order to promote the industry and simultaneously to protect the interest of the consumers."

Under the system of cross-subsidization, consumers with higher power usage are made to compensate for lower costs per unit charged from consumers with lower power usage.