In a unusual move, the Delhi government asked the city's power regulator DERC to keep the tariff determination process, on hold and respond to matters related to severe financial constraints claimed by private discoms. Chief Minister Sheila Dikshit has thrown her weight behind private power distributing companies (discoms) in their demand for a hike in electricity tariff. The private discoms have been pressing for a substantial hike in power tariff for the financial year 2010-11 arguing that that cost of buying power from the open market has increased manifold. The Chief Minister's office said the government has asked the DERC not to announce the new tariff order for the financial year 2010-11 for "time being" and keep the rates for various categories at the same level as that of last year.
DERC (Delhi Electricity Regulatory Commission) is an independent statutory authority and the city government never in the past issued such directive to it although it has power to do so under section 108 of the Delhi Electricity Act.
The government invoked Section 86 of the Electricity Act, which allows it to seek DERC’s advice on police matters related to public interest. The government could also invoke 108 of the same act, which gives it overriding powers on DERC in public interest.
“Discoms had said they have no money to sustain operations. We have asked DERC to consider it and advice us,” said Delhi power Secretary Rajendra Kumar, reiterating “tariff was still the DERC’s prerogative”.
The three discoms — BSES Yamuna, BSES Rajdhani and North Delhi Power Limited — have been demanding return on investment made in financial year 2009-10 saying it was an exceptionally expensive year for them. By rule, they should get this return next year.
According to sources, while discoms have been crying hoarse about facing financial difficulties and not being in a position to pay for power purchase this year, the audited accounts of 2009-10 of BSES Yamuna, BSES Rajdhani and NDPL show a healthy surplus of over Rs 1,200 crore.
These audited profit and loss accounts are signed by the discoms themselves and have punched a huge hole in their claims that they were facing losses.
"Despite having to buy expensive power in peak summer which defied all predictions, all discoms show a surplus in their audited profit and loss account of the last financial year. The cost of energy purchased and revenue from sale of energy form the main part of ARR (Average Revenue Requirement petition). If you take this into account, the profits shown by the discoms would have meant a tariff reduction," said a source.
For instance, BSES Yamuna's income from sale of energy was Rs 2809.55 crore and the cost of energy purchased shown is Rs 2188.32 crore. This is a profit of Rs 622 crore. Similarly, NDPL also shows a profit of about Rs 700 crore and BSES Rajdhani a profit of Rs 200 crore. In the last tariff order of 2009-10, DERC had projected a surplus of Rs 939 crore but the actual surplus has surpassed that.
"The discoms were depicting losses in their projected accounts, but the audited figures show good profits. The figures have been audited by a third party and have been submitted recently. These numbers call for a tariff reduction," said sources.
There are indications that it was the strong lobbying by discoms who feared a reduction that led to the tariff being delayed in the first place. The discoms used every trick in the book to get a hike and had even approached chief minister Sheila Dikshit, threatening outages if their demands were not conceded.
"In the last financial year, we exhausted all resources to buy power to meet Delhi's load. Till September, when the new projects come, we need some relief to overcome our cash flow crisis," said a top discom official. But anticipating that DERC would not have accepted their demands, the discoms were contemplating even going to court to get a stay on the tariff order before the Commission announced it.
Last Tuesday, the CM held a meeting with DERC over tariff where Dikshit apparently told the commission to address the concerns of the discoms. The government had received some representations from the three discoms on the issue of severe cash flow constraints affecting their ability to purchase power in 2010-11.
They had also submitted in their representation that their revenue gaps have accumulated beyond sustainable levels and the assumed higher projections for tariff fixation had eroded their capability to buy more power and also that due to high debt to equity ratio they were finding it difficult to get loans from banks to continue their operations.
Source- Times of India