Beginning of an era of power tariff hikes

The 21.77% hike in the cost of electricity might have dented your monthly budget for good, but discoms officials and the Delhi Electricity Regulatory Commission claim it is not enough.

The 21.77% hike in the cost of electricity might have dented your monthly budget for good, but discoms officials and the Delhi Electricity Regulatory Commission claim it is not enough.

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Friday’s order has unleashed a potential era of huge tariff hikes in the future. Not just the past shortfall of Rs 6,000 crore that was approved on Friday leading to the hike, but there is another “shortfall” of around Rs 1,500 crore that appears to be now looming over Delhi’s power consumers.

This figure is on account of two orders of the Appellate Tribunals of Electricity, which went against the previous regime of the DERC and were put up for appeal at the Supreme Court. It has been months but the appeals have not yet been admitted.

In at least one of the orders, the DERC is on very weak grounds, its officials now admit internally, and that can spell trouble for consumers.
This order involves a dispute on the recovery of around R1,000 crore by Delhi Transco Limited from discoms.

Consumers’ Arrears
Before privatisation in 2002, the erstwhile Delhi Vidyut Board had passed on R1,000 crore of arrears of consumers to Delhi Power Company Limited (DPCL), the holding company of the state government.

When the DERC asked the DPCL to give that money to Delhi Transco as entitlement, it refused saying it was not bound by the regulator’s orders, thereby creating a shortfall of R1000 crore for Transco.

“The ATE ordered that Transco be allowed to recover the amount, but the DERC decided to appeal to the Supreme Court, although its basis seems arbitrary,” said a senior official on the condition of anonymity. “So most probably it will come back as a burden on Delhiites when DTC recovers it from discoms, which will pass it on to their consumers.”

The other order, against whose appeal has not yet been admitted, is about a purchase of equipment worth R535 crore by BSES from its parent company Reliance Infra.

Securing profit
This long-drawn battle involves the then DERC alleging that the parent company had overcharged BSES to secure a profit at the cost of Delhi’s consumers.

“While the ATE referred the matter back to the DERC, we cannot say that the grounds here are as weak as the other case. But still, the appeal has not been admitted,” said the official. Reliance has always contended that the said purchase did not tantamount to foulplay.

This apart, the rest Rs 4,800 crore of the total Rs 6,000 crore shortfall that was approved on Friday and remains to be recovered through tariff will keep accumulating a carrying cost of at least 11% per annum in the form of interest to banks and snowball into a huge figure in future until recovered through tariff.

“If the money is denied now, discoms claim to borrow that amount and keep gathering interests that is ultimately paid by consumers,” said an official.

So the bottomline is: they are gearing up to burn a huge hole in your pocket year after year. And this is just the beginning.