The Union Ministry of Power has recommended an inquiry against Member, Delhi Electricity Regulatory Commission (DERC) for gross violation of the Tariff Policy of 2016 despite several circulars/advisories from the Ministry; proved misbehavior; and acting contrary to the principles of judicial and hierarchical discipline. The Ministry said that DERC continues to be violating statutory provisions and the tariff policy ignoring several reminders/circulars/advisory from the ministry.
“The DERC was reminded separately vide letters dated October 13, 2021 and November 3, 2021, to comply with the provisions of the Tariff Policy and various provisions under the Act to begin recovery of outstanding Regulatory Assets of Rs 7473 crore. which were approved by the Commission as per the Tariff Order for the year 2020-21. “The Appellate Tribunal for Electricity in a series of Orders has given its findings that the DERC is not performing its duties in accordance with the Electricity Act, 2003,” the Ministry said in a note to Delhi Lieutenant Governor.
The DERC has withdrawn its 2018 suggestion that electricity subsidy be directly credited to accounts of consumers in Delhi. This comes weeks after the state’s power department wrote to Deputy Chief Minister Manish Sisodia, asking that the subsidy be transferred to people in their accounts through Direct Benefit Transfer (DBT). At present, the subsidy for power bills is given to power discoms directly by the government. This, in turn, is adjusted against bills that the discoms — BSES Rajdhani Power Limited and BSES Yamuna Power Limited — owe to government agencies for purchasing electricity for distribution.
The ministry further said that the cash flow across the whole value chain of electricity sector is largely dependent on the Distribution licensees' financial health, which in turn is dependent critically on cost reflective retail tariff to be determined by the State Commissions.
“The Electricity Act, 2003 provides that the tariff should be cost reflective. Section 61 (g) of Electricity Act 2003 mandates that Appropriate Commission while determining the Tariff shall be guided by the objective that the Tariff progressively reflects the cost of supply of electricity and also reduces cross subsidies within a specified period. The Tariff Policy 2016 also provides for a maximum of 20% variation in the retail tariff with respect to the Average Cost of Supply (ACoS). Contrary to the above statutory provisions, the DERC has allowed the Regulatory Assets to increase to Rs. 8,955 Cr. as per the Tariff Order issued for FY 2021-22 instead of liquidating the same. Till date, the Commission has not come up with a trajectory to liquidate these Regulatory Assets,” it said.
