Arvind Kejriwal's electrifying election victory has raised hopes of lighter power bills in Delhi but companies that deliver electricity to households are bracing for shockwaves from the man who has taken them on in the past, is determined to get their accounts audited and expose them to market competition.
Company executives say that with his overwhelming majority in the Delhi assembly, Kejriwal's Aam Aadmi Party is likely to forcefully delve into the affairs the distribution arms of Tata Power and Anil Ambani-led Reliance Infrastructure. Executives recall his 49-day stint last year, during which he took on both Mukesh and Anil Ambani. For the record, both companies have issued almost identical statements to welcome him, promise to work closely with the Delhi government, highlight their efforts to meet peak demand, and say they are cooperating with on-going CAG in the audit of their books.
AAP, which led a high-pitched campaign promising cheaper water and electricity in Delhi, had asserted that the audit of the two BSES distribution companies and Tata Power Delhi Distribution Ltd ordered by its government in December 2013 has been put in 'cold storage' and promised that if voted to power it will restart audit by the Comptroller and Auditor General of India, which has rattled the telecoms, coal and oil exploration industries with castigating reports in recent years.
However, distribution companies say they are starved of funds as they need to recover a total of .'27,000 crore of past costs, called "regulatory assets" in industry parlance, from a tariff increases. Last year, BSES had a showdown with NTPC as it couldn't clear its bills in time, putting Delhi on the verge of a blackout. Further, the CAG had complained to the Delhi High Court that the distribution companies were not cooperating in the audit. The companies had earlier questioned the powers and jurisdiction of the CAG to audit a private distribution company.
In its manifesto, AAP had said it will ensure that power distribution companies purchase electricity from economical sources and wriggle out of expensive and unsustainable power purchase agreements. "AAP will take measures to provide relief from rising power bills, namely generating cheaper electricity, improving transmission efficiency, fixing billing defects and correcting meter defects," it said.
Industry experts said there was limited scope to lower tariffs since the distribution companies purchase electricity at higher cost but the absolute majority will enable the new government to open the power distribution segment of Delhi to more players to bring competition and reduce tariffs. In any case, tariffs are determined by the regulatory authorities, not the local government unless it subsidises a section of the consumers.
The central government has been working for over a year to introduce retail competition in distribution segment by amending the Electricity Act. The proposal includes segregating infrastructure ownership and power supply businesses to give consumers the freedom switch operators like mobile number portability.
Tata Power Delhi Distribution Ltd said the audit of its books is ongoing since January 2014 and the company is extending full cooperation to the designated audit team.
"We welcome the mandate of people of Delhi in the Assembly Election - 2015 and congratulate Aam Adami Party. We are committed to work closely with the new Government, our joint venture partner, to provide reliable and quality power supply in our area of power distribution in North and North West Delhi," the company said in a statement. BSES also congratulated Kejriwal and said: "We are committed to work with the Govt. in ensuring uninterrupted and quality power supply and the best of consumer services in our areas of South, West, East and Central Delhi."