Experts warn taxpayer of power tariff burden

NEW DELHI: Electricity tariffs in Delhi have become the biggest selling point for political parties in Wednesday's polls. While new entrant Aam Aadmi Party has promised to cut tariffs in Delhi by 50% if it comes to power, the BJP manifesto has assured a 30% reduction. However, power sector industry experts say that, with discoms already defaulting on payments and unable to pay generation companies, the only way out would be increasing government subsidy.

Delhi discoms BSES Yamuna, BSES Rajdhani and Tata Power Delhi have been complaining to regulatory body DERC over unrealistic tariffs for the last several years. The financial situation of discoms has reached a point where they claim they are surviving only on bank loans and borrowings.

Reliance discoms, in fact, have been regularly defaulting on payments to NTPC, Damodar Valley, IPGCL and PPCL. DERC has also accepted that tariffs in Delhi are below par and have announced a series of hikes over the last few years to meet costs. In this scenario, promises by political parties for a tariff reduction could only come at the cost of the taxpayer if government subsidies are increased, say experts.

Tata Power Delhi CEO Praveer Sinha said, "Reduction in tariffs is only determined by DERC and the government or political parties have no role in this. The only way to reduce tariffs is by giving more subsidies. Discoms have to be financially sustainable and there is no clear cut way to reduce tariffs and can only come down by the subsidy mechanism. Even DERC knows that unless generation costs go down, power tariffs cannot reduce and it is the commission's responsibility to make the power sector sustainable."

"Unless there is some subsidy proposed by the government, with the current financial situation of the discoms, a tariff reduction is not possible. Companies are already not able to meet costs," a top official from east Delhi discom BSES Yamuna said. DERC officials, meanwhile, declined to comment on promises made by political parties and said they had no interaction with any party and were not involved in any party's agenda.

While AAP claims that a CAG audit of discoms will automatically show how discoms are actually in profit, BJP has come out with its own formula including bringing in more distribution utilities to end the current Reliance/Tata monopoly and bring down tariffs. "One of the ideas proposed is reducing surplus power. What parties do not understand is that surplus power is essential to ensure 24/7 availability of power in the city. To meet peak hour demand, surplus is sometimes necessary in certain time slots," explained a BSES official.

with thanks : Times of India : Link