The distribution companies have petitioned the Delhi Electricity Regulatory Commission for a substantial fuel surcharge hike

Going by the petition of the power distribution companies to the Delhi Electricity Regulatory Commission, the Capital might see a hike in electricity bills once the DERC approves the fuel surcharge hike. The discoms made the requests in their annual average revenue requirement (ARR) petition for financial year 2014-15 they submitted to the DERC. The DERC will take the final call on the issue in next three months.

As part of the annual tariff revision process, the discoms – Tata Power Delhi Distribution Limited and Reliance-backed BSES Rajdhani and BSES Yamuna Private Limited – have asked for the Power Purchase Adjustment Cost (PPAC) formula to be more “holistic” and reflective of the true power purchase cost and transmission costs incurred by them.

Deficit revenue recovery

They have also asked for the deficit revenue recovery, which is presently 6 per cent, to be increased. The discoms in their petition to the DERC did not seek any specific rate in the increase but asked for “whatever is appropriate”.

Interestingly, this is the first time since privatisation of power sector that the discoms did not seek any tariff hike in their annual Average Revenue Requirement (ARR).

DERC chairperson P. D. Sudhakar told The Hindu: “The discoms have not sought any tariff hike in the current year but have asked for liquidation of past regulatory assets. They have also petitioned that the PPAC and fuel surcharge to be more holistic and reflective of the purchasing cost.”

The discom officials said that they had informed the DERC through the tariff petitions that they would be able to manage their finances with the PPAC hike and recovery of past dues for the next fiscal, without the need of a tariff revision.

“The discoms’ cost of buying power from generating companies has increased by around 300 per cent in the last two years while the power tariff, in the corresponding period, has risen by around 70 per cent. This virtually non-cost reflective retail tariff has led to a huge build-up of future receivables (regulatory assets) to the tune of over Rs.19,500 crore, impacting the sustainability of operations of the Delhi discoms,” said the official.

The DERC had introduced fuel surcharge in 2012 to help the private power distribution companies adjust their power purchase cost.

In January, the power watchdog had allowed the discoms to levy the fuel cost adjustment charge or fuel surcharge which resulted in a hike of 6-8 per cent in the tariff.

More In: Delhi