Delhi discoms won’t yield to tariff cut demand

Tags: News
It is unlikely the three power distribution firms of Delhi will give in to the AAP government’s demands for a tariff reduction.

Instead, they want the entire supply chain, including the power generators from whom they buy electricity, audited. There are two issues on which they are unlikely to stand down. One: approved regulatory assets worth Rs 11,400 crore for 2011-12 they still have to recover. The other: their estimated revenue requirement of Rs 15,800 crore for 2013-14, which also needs to be approved.

Delhi Electricity Regulatory Commission (DERC) chairman PD Sudhakar says, “The commission has started recovery by charging customers an 8 per cent surcharge on current bills. But we will have to wait for next year’s submissions from the discoms before we can find out the actual recoveries.”

He chose not to say if there will be additional hikes, since, all other things being constant, it will take at least eight years to recover the 2012 regulated assets alone (as the discoms claim).

“If there are no increases, or cuts in tariff as the Aam Admi Party has ordered, it is anybody’s guess what will happen to the financial state of the discoms,” says a power consultant.

He adds that 95 per cent of the companies’ costs go towards paying for power bought from NTPC and NHPC.

The fixed cost component of power bought from new plants is 60 per cent, or Rs 3 a unit, while the cost of electricity from old plants is 60 paise.

“The generation companies are forced to import coal and blend it with domestic coal, which has a high content of impurities. This makes power costlier. The government will have to look at improving the overall supply chain. The issues cannot be sorted by auditing the books of private discoms alone, but vast scale irregularities in the public sector companies also need to be sorted out,” said the official of a Delhi discom resisting the Comptroller and Auditor General’s audit.

Power consumption in Delhi has more than doubled in five years to 5,653 mw (as of last June), which is more than Mumbai and Chennai’s combined demand. But Delhi’s tariff is one of the lowest among the metros, claims the official.

The discoms claim to have reduced distribution losses from 57 per cent to 17 per cent in the decade since privatisation.

The surplus revenue generated has been used to keep the tariff low. Commercial losses have also been brought down from 45 per cent to 5 per cent, they say.

If distribution losses were still a high 56 per cent as in 2002, the average retail tariff in Delhi would have been Rs 13.77 a unit.

With lower losses, the tariff is averaging Rs 6.22 for all consuming classes, i.e., retail, commercial and industrial.

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