Delhiites are all set to face the heat of the increase in power tariff from Monday. The Delhi Electricity Regulatory Commission (DERC) has increased the power tariff up to 6 per cent in the national Capital while Delhi Government will ask DERC to review its order of power tariff hike. Both the Congress and the BJP are gearing up for another political battle to take on the AAP Government over the revised power hike move in the city. The tariff hike was reportedly necessitated as the Appellate Tribunal for Electricity (APTEl) had earlier instructed the DERC to bring power purchase adjustment cost (PPAC) within three weeks. The deadline set by the Appellate Authority is to expire on June 15.
DERC has approved 4 per cent hike for TPDDl, 6 per cent for two BSES and 5 per cent for New Delhi Municipal Council (NDMC) as PPAC. The TPDDl has sought up to 4 per cent hike as PPAC while BSES discoms have demanded 7 per cent-20 per cent hike. The PPAC will be calculated on overall bill. DERC has however, clarified that any spillover of the entitlement of PPAC during financial year 2014-15 will be “duly factored into the tariff calculation of FY 2015-16 so that the entire entitlement is recovered as far as possible” during that period.
As per sources in the industry, Delhi discoms are owed Rs27,000 crore by the regulator on account of deferred payments (revenue gap). PPAC is a surcharge given to compensate the discoms for variations in the market-driven fuel costs (additional costs on account of increase in coal and gas prices). The DERC had introduced PPAC in 2012 to help the private power distribution companies recover additional cost on account of increase in coal and gas prices.
However, Delhi is not the only state that has a PPAC mechanism. In India, over 21 States have PPAC. Timely PPAC is a requirement under the Electricity Act, DERC’s own tariff orders and APTEl orders. CERC allows central PSU gencos and trancos PPAC on a monthly basis. According to sources in the power industry, Delhi discoms buy around 80 per cent-85 per cent of their electricity from Central generating stations, which are governed by the CERC. They are able to pass on the 100 per cent increase in the inputs costs to the discoms on a monthly basis. Delhi discoms, which are governed by the State regulator, on the other hand, are unable to do so.
The city has seen a series of hike in power tariff in the past two years. The tariff was hiked by 22 per cent in 2011 followed by 5 per cent hike in February 2012. The tariff was increased by up to 2 per cent in May 2012 year and again by 26 per cent for domestic consumers in July 2012. It was hiked by up to 3 per cent in February 2013 and again by 5 per cent in August 2013. It was hiked by up to 7 per cent in November last year. The cost of buying power has increased primarily on account of an increase in the input prices of raw material like coal and gas.
The revision in power tariffs based on fuel prices has to be effected every quarter. But the revision of electricity tariffs could not be affected in the last three quarters as a result of which the discoms had approached the Appellate Tribunal for immediate hike in power rates as the companies were reportedly facing severe financial crunch.
With price of coal and gas going up in the recent months, the cost of power production has also increased. A senior officer said that the discoms were going to increase the power tariffs between 4 per cent and 6 per cent. The officer said that the electricity production was also going to be affected as the discoms were facing severe financial crunch.
Many areas in the city have already being facing major power cuts. The city also witnessed several protests in the recent past in different areas. Even the Congress and the BJP had held protests against the power cuts. The power tariff hike is not the only worry for the Delhiite as the discoms were also going to increase the annual power rates in 20215-2016. The revised power tariffs are going to pose a major challenge to the AAP administration who had promised before elections that it would provide cheap power and drinking water to the Delhiites.
Soon after the AAP Government took over, the first major decision it took was to provide 50 per cent subsidy to those who had been consuming up to 400 units of electricity in the national Capital. The power subsidy will put a burden of Rs1,500 crore on the Government exchequer. Even the Congress Government lead by former Chief Minister Sheila Dikshit had been giving power subsidy.