Delhi power crisis gets worse, Arvind Kejriwal warns discom licences could be cancelled

Written by fe Bureau | New Delhi | Updated: Feb 1 2014, 23:22pm hrs
PowerRegulatory assets are the difference between the cost and supply of electricity that are not passed on to customers. Reuters
Barring a last minute order by the central government to NTPC, or a temporary cash support by the Delhi government, large areas in eastern and central parts of the capital can expect 10-12 hours of daily power cuts within a week.

This is despite the 7-8% fuel surcharge adjustment allowed by the Delhi regulator on Friday that, from March 15, will add R20-30 crore per month to the revenues of each of Delhis electricity distribution companies (discoms).

While BSES Yamuna Power (BYPL), which supplies power to 13 lakh customers, has written to the Delhi power secretary saying it has no money to pay NTPC/NHPC their dues Rs 204 crore is due by the end of the month chief minister Arvind Kejriwal said the companies licences will be cancelled if they behave this way. There are lots of power companies in the country, he said, not just those belonging to Tata and Ambani. For now, it is only the Reliance Infrastructure-promoted BYPL, and not Tata Power Delhi Distribution (TPDDL), that has talked of impending power cuts.

Delhi power crisis

NTPC sources said if the dues were not paid within a few days, a disconnection notice would be served on BYPL.

Under the law, a three-day notice is given before power supplies are cut off. NTPC officials said this problem of dues takes place each year but, in the past, the Delhi government has released some subsidy payments to alleviate the immediate crisis. This time around, however, the chief minister is adamant that no help will be extended.

An immediate loan will help tide matters over, but only for a bit since the dues of the two BSES companies to various suppliers add up to Rs 5,236 crore. Of this, BSES Rajdhani Powers (BRPL) dues are Rs 2,846 crore, while BYPLs are Rs 2,390 crore.

Two suppliers, DVC and SJVN, have already stopped supplies adding up to 259 MW. BYPLs total needs are 1,500MW and a third of this is supplied by NTPC. The two BSES firms owe Indraprastha Power Rs 1,226 crore, Delhi Transco Rs 913 crore and Pragati Power Rs 1,304 crore. DVC is owed Rs 645 crore and SJVN, formerly Satluj Jal Vidyut Nigam, Rs 115 crore.

Ironically, while the two BSES companies owe suppliers Rs 5,236 crore, Delhis customers owe them Rs 14,770 crore, according to the statutory advice given to the Delhi government by the Delhi Electricity Regulatory Commission (DERC). If you add TPDDL, this rises to Rs 19,505 crore. According to DERC, Rs 6,918 crore of regulatory assets were due till FY11 to all three discoms. In addition, the DERC letter says, the discoms two owned by BSES and one by Tata Power have projected regulatory assets of another Rs 12,600 crore till FY13.

Regulatory assets are the difference between the cost and supply of electricity that are not passed on to customers, but are IOUs on the books of the discoms. According to a ruling by the Appellate Tribunal for Electricity in 2011, ideally all regulatory assets should be cleared within three years.

In the case of Delhi, that would require a 20-25% hike in tariffs each year. In the current environment where tariff cuts are being made, from Delhi to Haryana to Maharashtra, however, that does not look possible.

In a letter to Delhis power secretary, BYPL CEO Arvind Gujral has said that to ensure no disruption of service to our consumers and avoid any load shedding, we had made alternative arrangements through short-term purchases. However, that is no longer feasible. Both NTPC and NHPC, the letter goes on to say, will regulate power jargon for cutting off supplies till payments are made resulting in depletion of over 500 MW of power supply from early February 2014.