Power rates unlikely to go up in election year

In its internal meetings, the Delhi Govt has made it very clear a power tariff hike in an election year is unthinkable, reports Moushumi Das Gupta.

Delhi’s power regulator is busy these days finalising the city’s power tariff for 2008. On hand is a tough job. Officials at Delhi Electricity Regulatory Commission (DERC), after much jugglery, have managed to scale down the overall revenue gap of the sector to approximately Rs 660 crore from the original Rs 1,300 crore projected by the three private power distribution companies in their tariff petition filed before the regulator in October last year.

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It is unlikely, however, that domestic consumers in the city will feel the pinch. In its internal meetings, the Delhi government has made it very clear a power tariff hike in an election year is unthinkable. “A power tariff hike at this stage would be akin to committing political hara-kiri,” said a senior Delhi government official.

If the Delhi government does not chip in with another subsidy –– like it did in the last two years –– this would mean a tariff hike of less than three per cent for all the four categories put together –– domestic, agriculture, industrial and commercial. This, however, does not take into account the hike of about 6.6 per cent that was negated in 2006 after distcoms and government agreed to give Rs 90 crore each.

But with the government adamant that there would be no hike, DERC is now planning to write a formal letter to the government asking it to specify the quantum of subsidy it intends to give to negate a hike.

“DERC officials have told us verbally that the revenue gap for 2008 is approximately Rs 660 crore. But they have to write to us formally asking for a subsidy,” said a government official.

Officials said they were working out the modalities of how much subsidy needs to be given. They are working on two or three models. “Like a subsidy for only domestic and agricultural consumers or giving subsidy to those consumers whose power consumption is less than 200 units. The government is treading cautiously as giving subsidy to just domestic and agricultural consumers might invite a backlash from commercial and industrial consumers,” said an official. The official added, “The picture will be clear by the end of this week, once we get a formal request from DERC on the subsidy.”

In December last year, the government had agreed to give a subsidy of Rs 1 per unit to all such domestic consumers whose power consumption is upto 200 unit during peak periods (April to September and December to January).