Thursday, June 10, 2010

Now Games Becomes a Reason for Government to Hike Electricity Tariff

Several weeks after it was accused of stopping Delhi Electricity Regulatory Commission (DERC) from announcing new tariff rates, the Sheila Dikshit government on Wednesday came out with its first official defense of the decision. It says that the Commonwealth Games has forced the government to ‘‘request DERC to look into the grievances of the discoms’’.

The statement issued by the chief minister’s office says that in view of the upcoming mega-event, discoms have been asked to mobilize and arrange for additional power during the Games. The release states that ‘‘deferment of timely recovery of power purchase costs to discoms by DERC has become a concern for discoms’’ and ‘‘would have proved to be an obstacle in organizing the Games”. The statement goes on to say that its concern about its “global image” made the government intervene. A table of power tariff in the major cities has been attached to underline the point that Delhi’s rates are among the lowest.

Breaking the long silence on the issue, the statement says that the Electricity Act provides for speedy recovery of fuel costs as well as power purchase costs for discoms. It says that the DERC had not taken due cognizance of the above fact for the past many years while NTPC is allowed to recover the fuel cost adjustment on monthly basis as approved by Central Electricity Regulatory Commission (CERC). In addition, the government, replying to the BJP’s memorandum on power, also quoted the recent gas price increase which it said was going to impact Delhi’s power purchase cost since more than 50% power of Delhi is expected to come from city-based gas generation plants. The chief minister interestingly, had issued a statement only last week saying that the government is willing to accept a reduction in power tariff provided that does not impact the “future power situation”.

While DERC officials declined to comment on the government’s statement, experts pointed out that the government had made an assumption that discoms’ concerns would not be met even without knowing what the unreleased tariff order of 2010-11 said. ‘‘Whatever the demands of the discoms, their spiraling costs and higher power purchase costs the government cannot just assume that the commission has ignored them basing it just on representations by the discoms. The fact that audited accounts of discoms show a healthy profit has to be taken into account too,’’ said officials.

The government also quoted an instance in Maharashtra Electricity Regulatory Commission in 2009 wherein the solicitor general’s opinion was sought. The latter had opined that government intervention cannot be ignored altogether. Taking the battle into DERC’s court, the statement mentions several instances where tariff orders had been issued beyond the 120-day statutory period by DERC. This, apparently, is to counter the regulatory body’s claim that they are obliged to announce the tariff within the prescribed period. However, sources said that tariff orders in the last two years had been made within the statutory period including last year.