Administrative hurdles delay annual revision of power tariffs in Delhi

“The tariff order is ready, but some verification process is going on currently. Also, the process coincided with the selection of the DERC chief which too has not been completed till now,” said a senior official.

The schedule for the annual revision of electricity tariffs in Delhi has been delayed by nearly three months, and so has the process of selecting a new chairperson for the Delhi Electricity Regulatory Commission (DERC), senior government officials said on Monday.

On April 1 this year, the Union ministry of power wrote to all state power regulators to mandatorily issue the tariff orders before April every year. (Representational image)

“The tariff order is ready, but some verification process is going on currently. Also, the process coincided with the selection of the DERC chief which too has not been completed till now,” said a senior official, on condition of anonymity.

On April 1 this year, the Union ministry of power wrote to all state power regulators to mandatorily issue the tariff orders before April every year. “It has been brought to the notice of the government that despite explicit legal provisions, there are significant delays in the issuance of tariff orders by some of the state commissions. Regulatory assets are being created by some of the state electricity regulatory commissions (SERCs) as a matter of routine. This is against the letter and spirit of the law and not only negatively impacts the financials of the distribution licensees and their business sustainability but is also prejudicial to the public interest as the discoms do not have enough money to buy power or maintain the distribution system,” read the letter written by Ghanshyam Prasad, joint secretary, government of India. HT has seen a copy of the letter.

Now, a second committee headed by Justice (retd) GP Mittal has been formed and has even received the approval of the lieutenant governor, but the Delhi government is yet to constitute the screening committee which is supposed to ask the public to send in applications, various documents seen by HT showed.

Last year also, the DERC issued the tariff order as late as August. In its 2020 order, the power regulator had increased electricity bills of all consumers marginally by 1.2 percentage points from September 1 through a hike in the surcharge. It , however, did not change the per unit and fixed rates.

This year, discoms BSES Rajdhani and BSES Yamuna have projected a revenue gap of ₹1,703 crore and ₹1,148 crore respectively for 2021-22, while Tata Power expected a gap of ₹1,108 crore. The companies have put the cumulative revenue gap (till 2019-20) at ₹28,623 crore (BRPL), ₹19,123 crore (BYPL) and ₹3,810 crore (TPDDL). Discoms have been demanding a power tariff hike over the last six years.

However, the Delhi government is unlikely to increase tariffs in the national Capital as it is one of the key models of its governance which the Aam Aadmi Party plans to showcase in the upcoming MCD elections in Delhi and the assembly elections it intends to fight in six states such as Gujarat, Punjab, Goa and Uttar Pradesh in two years.

The DERC is an autonomous quasi-judicial body, but the selection of the commission which has a chairperson and two members are done with some involvement of the Delhi government. Besides, the Delhi government, from time to time, can also send policy proposals to the commission by invoking Section 108 of the Electricity Act.

The annual power tariff announcement is important because the traders are demanding that the Delhi government waive off the fixed charges in power bills as the city was put under a strict lockdown for 6-7 weeks with the Capital reeling under a brutal fourth wave of Covid-19.