The Delhi Government on Wednesday defended its direction to Delhi Electricity Regulatory Commission, seeking statutory advice and clarification on the issues raised by the power distribution companies in their representations to the Government. The Government also made a pitch for raising power tariffs on the ground that it will ensure uninterrupted supply of power in the city.
Replying to the Bharatiya Janta Party’s queries raised in a memorandum to the Chief Minister, the Delhi Government said it had sought statutory advice of the DERC on issues raised by discoms covered under Clause 5.3(h)-4 of the National Tariff Policy which state: ``Uncontrollable costs should be recovered speedily to ensure that future consumers are not burdened with past costs. Uncontrollable costs would include (but not limited to) fuel costs, costs on account of inflation, taxes and cess, variations in power projects units costs including on account of hydro-thermal mix in case of adverse natural events.”
Siding with the discoms on the issue of speedy recovery of fuel costs, the Government has quoted the Electricity Act, 2003, which provides for speedy recovery of the fuel costs as well as power purchase cost from the consumers so that the new consumers are not burdened with the past cost.
The Delhi Government accused the DERC of not taking “due cognizance” of this provision for the last many years while NTPC is allowed to recover the fuel cost adjustment on monthly basis as approved by Central Electricity Regulatory Commission.
Speaking up for the discoms, the Government has also stated that the issue of gas price increase was in the offing and this has been corroborated by the recent policy of Government of India to shift the gas prices from existing administrative prices mechanism to market index.
``This is giving a predictive signal that input fuel prices are going up during the current year,’’ the Government for its part has said. It has also pointed out that a recent decision of the Ministry of Petroleum and Natural Gas to hike natural gas prices by almost 100 per cent is going to impact Delhi power purchase cost since more than 50 per cent power share of Delhi is expected to come from Delhi-based gas generation plants.
To buttress the claims of the discoms, that their financial condition is precarious, and unless their dues are reimbursed, ensuring an uninterrupted supply for the city will be difficult, the Government has stated that it had to request the DERC to look into the grievances of discoms and address the issue of power purchases by giving suitable advice to the Government.
Taking on the DERC, as it were, on the issue, the Delhi Government has stated that as a regulator of this sector, the Commission’s role is to protect the interest of consumers and regulate the utilities. The representations of discoms to Government, it said, ``indicated the lack of regulatory will as far as inducing the discoms to perform their services efficiently (supply-side efficiency goals) by not paying them their legitimate power purchase costs which are uncontrollable cost and passed through the tariff as per Multi Year Tariff and as per National Tariff Policy.’’
The Government has also defended its approach in the matter saying in the past seven years’, many Tariff Orders by DERC have been challenged before Appellate Tribunal of Electricity and in number of cases judgements of APTEL have gone in favour of Delhi power utilities.
Sidestepping the advice given by the Solicitor General Gopal Subramanium to DERC, asking them to announce the tariff, the Delhi Government chose to take up his advice in a similar case pertaining to Maharashtra Electricity Regulatory Commission.
On the issue of delay in issuance of tariff orders, the Government has stated that the claim of DERC that they are statutorily obliged (under section 64(2) of Electricity Act, 2003) to issue tariff order within 120 days from the date of admission of tariff petition has also in the past has not been adhered to. The number of days between admission and order were 145 in 2004-05, 176 in 2006-07, 126 in 2008-09 and 160 in 2009-10.
As far as auditing of financial statement of the discoms and their regulation is concerned, it is in the domain of DERC, the Government said.
The Delhi Government also said it has been offering a targeted subsidy of Rs.1 per unit to all the domestic consumers with a consumption maximum up to 150/200 units per month during off-peak /peak months since March 2008. Therefore, effective applicable tariff for this category of domestic consumers comes to about Rs.1.70 per unit.
Since about 60 per cent consumers living in the areas of the discoms area are taking benefit of this targeted subsidy scheme, the Government has stated that ``it is for the DERC to consider the case of tariff fixation based on the guidelines of National Tariff Policy and Electricity Act, 2003, in such a way to balance the long term interest of all stakeholder.”