For not paying dues to generation and transmission companies

The Delhi Electricity Regulatory Commission on Friday pulled up power distribution companies BSES Yamuna Power Limited and BSES Rajdhani Power Limited for not paying their dues and issued a notice to them asking why their licences for operation should not be suspended.

The notice comes in the wake of a complaint from the Delhi Government claiming that despite warnings the two companies have failed to pay outstanding dues to the generation and transmission companies.

The regulator in the notice has written: “The Commission has also observed that a number of regulatory notices have been issued by various generation and transmission companies stating that power supply to the two discoms will be curtailed unless large outstanding dues are cleared. If these utilities effect regulation, this can lead to widespread disruption of power supply to the consumers.”

Taking note of the uncertainty that looms over the city's power supply, on account of this non payment of dues, the Commission has invoked the provisions of Section 24 of the Electricity Act, 2003 and issued a notice to both the discoms.

The Commission has given the discoms time till December 2, 2011 to respond to its notice and explain why their license should not be revoked and an administrator appointed to discharge the functions of the licensees.

Outstanding dues

A formal hearing will be held on December 2 when the Commission will take a final call on the issue. According to sources in the power department the discoms owe Rs. 3,000 crore to National Thermal Power Corporation (NTPC), Damodar Valley Corporation and Delhi Transco. In September the NTPC had threatened to stop supply of power to he BSES unless their outstanding dues of Rs. 900 crore were met.

In October the Supreme Court had directed the two discoms to pay Rs. 45 crore out of Rs. 141.24 crore arrears due to Damodar Valley Corporation (DVC) towards power generation as an ad hoc arrangement by November-end.

Left to shoulder the blame for not paying their dues, the discoms for their part said that they will file their replies after studying the notice.

“We will study the notice and file our reply, but we have been saying all along that our fiscal condition is not good. We have kept the DERC and the stakeholders informed about our financial condition. And we are doing whatever we can to pay off our dues,” said Gopal Saxena, chief executive officer of the BRPL.

He said the “absence of a cost reflective tariff” has been the major reason why the discoms are in poor financial heath.

“Without a cost reflective tariff we have been pushed to a financial difficulty and the Reserve Bank of India's orders to other banks to not lend money to the discoms has added to our constraints.”

Mr. Saxena said the discoms, despite having limited funds have also not “compromised” on power purchase and have been consistent in supplying power.

“We have been providing uninterrupted supply to our consumers. We have a large consumer base and make sure that we comply with the DERC's orders to supply power round the clock.”

This is not the first show cause notice to the companies, in the past they have been pulled up for not providing uninterrupted power and sending inflated bills.

Financial situation

“The current financial situation of BSES is due to lack of cost reflective tariff for the past several years. This has lead to huge under recoveries of more than Rs.6,000 crore. This under recoveries has also been recognised by the DERC. The current tariff, even after the increase, does not even cover the cost of power purchase. There is still a shortfall of around Rs.2 per unit. Power is bought from PSUs like NTPC, NHPC. We will make detailed submission to the Commission to this notice. We are committed to supply quality and reliable power to the citizens of Delhi,” said the BSES in a statement.

“The above situation is prevalent across the entire country and has been recognised by the Ministry of Power, Planning Commission and Appellate Tribunal of Electricity in the latest order.”