DERC allows electricity bill hike, triggers political row

Delhi residents will pay more for electricity from their next billing cycle as power companies increase a surcharge known as the power purchase adjustment charge. The increase is meant to offset the cost of electricity that distribution companies buy from power generation companies, which has risen due to an increase in the cost of coal. The increase in PPAC will differ based on the area of the Capital a consumer resides in, and those consuming fewer than 200 units per month will not be affected. A political spat has erupted between the Delhi government and opposition Bharatiya Janata Party.

The Capital’s residents will need to pay more for electricity from their next billing cycle, with the regulator clearing the way for power companies to increase a surcharge known as the power purchase adjustment charge (PPAC), officials said on Monday, as a political spat broke out between the Delhi government and members of the opposition Bharatiya Janata Party (BJP).

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The increase in PPAC, which will differ based on what part of the Capital a consumer resides in, is meant to offset the increase in the cost of the electricity the distribution companies (discoms) buy from power generation companies, which in turn have raised rates due to an increase in the cost of coal.

“There are variations in the percentage hike in different areas. It does not mean that power will remain cheaper in some areas while in other areas the power will be much costlier in comparison. After the latest revision, the PPAC throughout the capital varies from 27% to 30% which will be charged over and above the tariff and fixed charges,” said a power department official.

The hike will not affect those consuming fewer than 200 units of electricity per month, which is made free by the government, Delhi’s power minister Atishi said, hitting out at the Union government for the mismanagement of coal.

The Delhi unit of the BJP, in power at Centre, instead blamed the AAP and said it will launch a protest on Tuesday to seek a roll-back. “The AAP government which came with the promise of free electricity has increased the power rates in Delhi through the back-door,” leader of opposition Ramvir Singh Bidhuri said.

What has added to the controversy is that the decision by the Delhi Electricity Regulatory Commission (DERC) comes within days of former Allahabad high court judge Umesh Kumar taking over even though the Delhi government approved the names of two other retired judges for the role. The matter is also due to be heard by the Supreme Court, which the AAP government approached prior to the lieutenant governor’s decision to name Kumar.

Delhi has three power distribution companies that have carved out the city (except Lutyens areas) in supply zones. BSES Yamuna Power Limited (BYPL), which supplies to east and central Delhi, has been allowed to increase PPAC by 9.42 percentage point; BSES Rajdhani Power Limited (BRPL), which serves south and west Delhi, by 6.39 percentage point, and Tata Power Delhi Distribution Limited, which serves north and northwest parts of the capital, by 1.49 percentage points. The New Delhi Municipal Council (NDMC), which serves the Lutyens areas has been allowed to raise it by 2 percentage point.

In practical terms, it means all domestic, commercial and industrial power consumers in south and west Delhi (served by BRPL) will have to pay 5.3% more in their bills, those in east and central Delhi (served by BYPL) will have to pay 7.7%, while those in north and north west Delhi (TPDDL served areas) will have to pay 1.2% more, the government said in a statement. The actual increase in bills will be slightly lower than what the Delhi Electricity Regulator Commission (DERC) allowed discoms because PPAC is a surcharge that is levied on per unit consumption before several other levies and taxes are added.

The hike varies across the city because the separate discoms purchase power under different agreements with various power-generating companies.

The bulk of the city’s consumers – at 45% -- are covered by BRPL, with TPDDL accounting for 29% and BYPL accounting for 26% of consumers.

People aware of the matter said according to rough calculations, a consumer in South Delhi (under BRPL) using up 600 units of power will likely bear an additional burden of around ₹190 in their monthly bill. For an East Delhi consumer, this number will be around ₹265 and for a north Delhi consumer, roughly ₹44 more.

Delhi power minister Atishi blamed Centre’s “mismanagement of the power sector” for the power hike said that the power hike will not have any impact on the free power and power subsidy being given by the Delhi government. “Those who consume less than 200 units and get zero electricity bill, will continue to get zero electricity bill,” Atishi said.

The minister further said, “Electricity has become costlier due to Centre’s mismanagement there is an artificial shortage of coal in the country for the first time in the last 75 years. The central government has forced companies to use at least 10 per cent imported coal, which is 10 times costlier than domestic coal. This is despite there is no lack of coal in the country.”

PPAC is generally revised once every quarter of the financial year and it can increase or decrease depending on various factors, including coal and gas prices used in power generation. Previous changes, such as the one in July, 2022, was of a lower 4 percentage point value.

Delhi BJP leader Manoj Tiwari and Ramesh Bidhuri -- both MPs -- in a press conference targeted the AAP government over the power hike. “The AAP government has increased electricity prices through PPAC and put financial burden on the people of the city. We demand the withdrawal of the hike and if the AAP does not roll back the hike, we will launch protests,” Tiwari said.

Delhi mostly purchases power from outside because it does not have own power generation sources --- from at least 40 power plants spread across the country including Uttar Pradesh, Haryana, Himachal Pradesh and also southern states.

A Delhi discom official said the current decision to increase the PPAC is based on three factors including blending of imported coal by the coal generating stations; increased gas prices and high prices in power exchanges.

“The power purchase cost is dependent upon the coal and fuel prices. Recently, there has been significant increase in coal prices due to higher imports and transport costs. The ministry of power has permitted automatic pass through of fuel and power procurement cost in tariff, but in the capital the pass-through mechanism does not exist and the discoms levy PPAC only after approval of DERC,” the official said.

According to state load dispatch centre data, shared by an official, after clocking a record power demand of 7695 MW in 2022, Delhi’s peak power demand during the summers of 2023 may cross the 8000 MW - reaching upto 8100 MW - for the first time. Earlier, in 2021, Delhi’s peak power demand had clocked 7323 MW, 6314 MW in 2020 and 7409 MW in 2020.

The number of electricity consumers in Delhi has grown by 82.97% during the decade (2011-2021).