Monday, August 7, 2017

DERC’s tariff hike plan threatens to jolt AAP’s power play

After almost two years, the power regulator is considering revising the rates despite the disapproval of the Arvind Kejriwal government, which came to power in 2015 on the promise of cheap electricity and water supply

Is your monthy power bill making you break into a sweat this summer? Get ready to shell out some more as the power regulator, Delhi Electricity Regulatory Commission (DERC), is considering a tariff hike after almost two years. Power rates in the city were last revised in 2014, when the tariff was hiked by 6%.
In 2015, the Aam Aadmi Party (AAP) came to power promising cheap electricity and water supply. Since then, the government has not allowed revision of power tariffs.
However, sources said that this year the DERC is considering a tariff increase of up to 5% as the three discoms -- BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL) and Tata Power Delhi Distribution Ltd (TPDPL) -- have showed a combined revenue gap of ₹21,624 crore. BRPL has given an aggregate revenue requirement (ARR) of ₹9,052 crore, TPDDL has demanded ₹7,680 crore and BYPL ₹4,892 crore.

Revenue shortfall

The discoms reportedly told the DERC that the revenue shortfall is a result of a non-cost reflective tariff over the past many years.
An announcement regarding tariff hike, which was supposed to be made on Friday, has been put on hold after pressure from political parties and Residents Welfare Associations (RWAs).
The residents have strongly opposed the move, stating that there is no point in increasing power rates as the discoms have done nothing to improve the services in the city. During peak power season, between May and August, several localities, especially unauthorised neighbourhoods, experience outages lasting up to 12 hours.
“The only consolation is that the bills are not very high. We will be forever grateful to the Arvind Kejriwal-led government for this. Before this, we would rarely get electricity during summers but still the bills would be high,” said Sonia Kumari, a resident of south Delhi’s Sangam Vihar.

Not all benefit

At present, electricity rates in Delhi start at ₹4 per unit for consumption of up to 200 units, going up to ₹5.80-₹5.90 per unit for 200-400 units, and ₹7.30 per unit for 400-800 units and higher for more consumption. The exact rates vary based on the electricity provider.
Those living in rented accommodations, however, claim they are yet to benefit from the lower rates. According to the 2011 census, around 38% of all families in Delhi live in rented accommodations. “The slashing of power tariff has made no difference in our lives. Our landlord charges us ₹9 per unit. If the rates are further hiked then how will we pay for other things?” said Sharmila, a resident of Raja Garden.
The Delhi discoms were privatised in July 2002. The distribution firms are joint ventures with Delhi Power Co. Ltd, which owns a 49% stake in each. The other discoms in Delhi are Military Engineering Services (for Delhi Cantonment) and the New Delhi Municipal Council (NDMC).
In a short-lived previous stint, the AAP government had offered to take over the functioning of the distribution utilities and also suggested the appointment of its officials as administrative officers for the utilities.

In the dark: During peak power season, between May and August, several localities, especially unauthorised neighbourhoods, experience outages lasting up to 12 hours.   | Photo Credit: Shanker Chakravarty

Trouble for AAP

The two discoms had also earlier sparred with the AAP government over tariff, with the then government announcing a 50% cut in electricity tariffs for households consuming up to 400 units of power per month.
The president of the East Delhi RWAs Joint Front, B. S. Vohra, said that there are many issues that need to be resolved before the regulatory authority considers a tariff hike. “Problems with regulatory assets, carrying costs, return on equity, surplus sales, operation and management expenses, Aggregate Technical and Commercial losses as well as distribution loses, have to be taken care of first,” he said.
“Unless the services are improved the DERC has no moral right to hike the power tariff,” Mr. Vohra added.
If the DERC decides to revise power tariffs, it will come as a huge blow to the ruling AAP government. The party’s manifesto in 2015 had promised reduction of electricity bills by half, CAG audit of discoms, Delhi’s own power plant, introduction of competition among discoms and Delhi as a solar city.

Trying their best

While the first promise was fulfilled within 11 days of the party coming to power, the CAG audit of power discoms is sub-judice and since 2002 only two discoms continue to provide power to the entire city, without competition.
The promise of making Delhi a solar city is gradually being fulfilled with the government notifying the ‘Delhi Solar Energy Policy, 2015,’ in June 2016. But it is yet to release the list of empanelled companies so that domestic consumers can get solar panels on their rooftops and avail 30% subsidy offered by the government.
“We have been in talks with the DERC and have clearly stated our disapproval for the tariff increase. There seems to be major interference by some outside elements in the functioning of the DERC. But we will not allow the people of Delhi to suffer because of the greed of the BJP,” said Delhi Power Minister Satyendar Jain.
with thanks : The Hindu : LINK 

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