Handling power problems in Delhi

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: With privatisation of power in Delhi, we expected the cost would come down and supply become steady. Unfortunately, neither has happened. The situation is very bad for small industries. The discoms don’t listen and overcharge consumers. What should associations together do?

—Gyanchand Gupta, Shalimar Bagh Industrial Area Association, Delhi

The three highlights of the pre-reform situation in Delhi were widespread theft of electricity, cross-subsidisation (i.e. high charges for one class of consumers, chiefly industrial/ commercial and sparing domestic consumers) and poor services. The Delhi Electricity Reform Act, 2000, came into being in 2001 and the Delhi Vidyut Board was dismantled into three separate utilities on the World Bank model — generation, transmission and distribution. Only the distribution of electricity was privatised and powers to fix rates and service standards were given to the ‘independent’ Delhi Electricity Regulatory Commission (DERC).

As per the Act, the utilities (of generation, transmission and distribution) submit their Annual Revenue Requirements (ARRs), with balance sheets, costs, etc. The Act mandated that the regulator would notify the rate after public hearings on the ARRs and after taking into account ‘consumer interest and efficiency.’ The Act provides substantial powers to the regulator in exercising this duty. The powers have been further strengthened by the landmark judgement of the apex court (WBERC vs CESC), according to which the regulator is not bound by the ARRs, balance sheets, etc. submitted by the utilities and can even alter the percentage of ‘reasonable return.’

Unfortunately, the regulators, in Delhi and elsewhere, have generally acted as an extended arm of the state. In Delhi, the Commission has even gone on record to state that it is bound by the policy direction of the Delhi government. The regulators have been accepting whatever figures are presented to them.