In an unprecedented move, the Delhi government has written a letter to the Delhi Electricity Regulatory Commission (DERC) chairman, P D Sudhakar, questioning the basis of the tariff revisions that resulted in "steep hikes" between 2011 and 2014. The letter from the power department has the approval of minister in-charge Satyendar Jain. It casts doubts on the genuineness of the electricity purchases claimed to have been made by the discoms and observes that the tariff should have ideally gone down.
The government, according to sources, wants to convey that it will not be a mute spectator and that it needs to be informed about the basis of any tariff revision. It has justified its unusual step by arguing that the elected government is answerable to consumers. The matter is likely to be taken up in the two-day assembly session that starts on Monday. Sources said the government may even review the DERC Act if needed.
In the letter, the power department pointed out that during 2011-2014, substantial tariff hikes were ordered by the Commission. If these were considered along with the regulatory assets created by DERC during this period, it virtually meant more than doubling of the tariff at a time when electricity supply in northern region had eased considerably. It has cited data from the DERC's website to back its arguments. It says that during this period, electricity rates fell by almost 40% for northern region on the Indian Energy Exchange (IEX) as compared to the rates prevailing for two to three years, up to financial year 2010. Going by the data and energy supply position for the period "ordinarily, there should have been a case for reduction in tariff between 2011 and 2014", the government has said.
The letter has also questioned the power purchase strategy of the discoms. "From financial year 2011 onwards, the average yearly rate of electricity purchased by the discoms (other than long-term purchases) have been consistently much higher, often by more than 40 to 50% as compared to the average yearly rate of electricity sold on the Indian Energy Exchange. This casts a doubt on the genuineness of the electricity purchases claimed by the discoms," the letter said.
The state has sought to know from DERC whether it had checked the genuineness of the rates at which electricity was purchased by the discoms from the open market and whether it ruled out the role of intermediaries who may have artificially inflated prices. Similar doubts have been raised about the genuineness of the thousands of crores worth of capital goods claimed to have been purchased by the discoms and their billing software.