Delhiites will have to shell out more for electricity—irrespective of whether or not the tariff is hiked—as the variable cost of the fuel (coal, gas) used to generate power will be recovered from consumers through a surcharge, most probably every three months.
A day after finishing with the public hearing on tariff, the Delhi Electricity Regulatory Commission (DERC) on Friday released a Staff Paper on the power purchase cost adjustment or fuel price adjustment mechanism seeking comments from the public.
While BSES Yamuna has asked a maximum 50 paise per unit surcharge, BSES Rajdhani has sought the surcharge to be 15% of the tariff, while North Delhi Power Limited has recommended that the variable expenditure incurred this quarter be recovered next quarter.
This is expected to take a huge burden off discoms’ cash-flow as they have been demanding this saying that prompt recovery of the fuel cost helps them manage cash-flow better. Power generation companies raise the bills for the fuel cost every month. This, the discoms have been saying, bleeds them dry. As per present norms, discoms pass this cost on to the consumers only two years later.
“The difference in actual cost of procurement of power and estimated cost of purchase of power gets trued up only after two years. The time lag of two years puts additional burden on consumers by way of carrying cost,” the DERC document says.
The DERC has put forth two issues for deliberation next week. Firstly, the periodicity, or how many times in a year should the consumers be asked to pay the surcharge, reflected in a separate column in the bill. All power distribution companies prefer a quarterly recovery.
And secondly, whether the mechanism should cover power procured on long-term contracts, or short-term purchases, or both. But what is more or less certain is that the surcharge mechanism, prevalent in many other states, is going to be a reality. The DERC has listed 15 such states for reference.
“We will call for comments from the stakeholders next week. The petition was admitted last year. We will discuss the merits of the case,” said PD Sudhakar, chairman, DERC.
Hindustan Times was the first newspaper to report about the possible implementation of this system twice last year, once on May 6 and again in November after the petitions of the discoms for this surcharge were admitted.