Power tariff in Delhi set to rise

The capital’s political temperature is likely to rise soon, with the electricity regulator set to allow power distribution companies like BSES and NDPL to increase tariffs. “We will issue a tariff order in a few days,” DERC chairman PD Sudhakar told FE.

The three Delhi discoms — BSES Rajdhani, BSES Yamuna and NDPL — have sought 60-80% increase in electricity tariffs in separate petitions filed with the Delhi Electricity Regulatory Commission (DERC) to cover their cost of power purchase, which they claim has risen sharply in the last two years due to increase in fuel costs. Besides, the discoms have claimed under-recovery of R9,000 crore due to non-revision of tariffs since 2005-06 and have requested the regulator to lay out a roadmap for recovery.

“We are looking into all the things, including under-recovery claims, and will make a judicious assessment,” said DERC chairman. Discoms have also been borrowing heavily from banks to buy power. The combined borrowings of the discoms are estimated at R10,000 crore.

“If I need to supply reliable power, the tariff has to reflect the cost of power purchase,” said Gopal Saxena, chief executive officer, BSES Rajdhani (BRPL), pointing out that the Central Electricity Regulatory Commission has allowed generating companies like NTPC to revise their generation cost on a monthly basis.

For 2009-10, the regulator had assumed BRPL's average cost of power purchase at R2.55 a unit. But the actual cost was much higher at 3.90 a unit.

For 2010-11, the cost has further gone up to R4.31 a unit. The discom has sought a 68% hike in the tariff to cover its power purchase cost. “Every year, BRPL buys 10,000-11,000 million units of electricity. That leaves an under-recovery of R1,600-1,900 crore,” said Saxena. The other discoms have also reported similar under-recoveries.

The capital's power demand has increased significantly from the year 2002 when these private players started their operations. The consumer base has also doubled in the distribution circle under BRPL.

Discoms are buying power from new plants like Dadri and Aravali where the power purchase cost is much higher due to frontloading of the fixed costs.

These discoms in Delhi are joint ventures between the state government and private power companies. As part of the agreement between the government and private companies, the discoms had to retain the erstwhile employees of the Delhi Vidyut Board. “We had to revise the salaries of these employees in line with the Sixth Pay Commission's award. But we are not able to increase salaries of other staff who were hired after 2002. As a result, we have started losing staff, which could in turn significantly impact the quality of our operations,” the BRPL CEO said.