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.

There is truth in what Gajendra Haldea (NCAER) surmised some time ago: “The possibility of regulatory capture by vested interests, simply because a lot of money is at stake, is not imaginary... fraud and abuse in regulatory affairs is a real issue.” A top official of a rating agency recently even remarked,‘How can a regulator be independent of the government, if he has been handpicked by the government for his loyalty? The regulators should be impartial and above politics. But the Indian regulatory bodies are a retirement bonanza for bureaucrats — and their decisions are struck down by higher authorities.’ The Joint Parliamentary Committee also expressed apprehension, asking ‘Who is regulating the regulators?’ The regulator has proved the soft belly of power reforms.

Second, the legislative intent of inducing checks and balances by ensuring participation of civil society has proved almost ineffective, because of two reasons. One, to discharge the role of effective watchdog, civil society institutions and consumer groups need to be armed with legal, technical and commercial expertise, besides that of international best practices.

Two, even if consumer groups manage this, as with the case of Energywatch, which challenged the DERC order in the high court, the arduous, time consuming and expensive procedure of appeal makes the exercise untenable.

Sadly, the recent approach of resident welfare associations, to get the rate reduced by mounting political pressure, is not the right way and is not sustainable. It is not the chief minister, but the regulator that needs to be confronted. And not through pressure, but by legal, technical and commercial arguments.

There are lessons to be learnt as to how to regulate the regulators and how to leverage civil society institutions in this role. For example, in Britain, after establishing the energy regulator, the department of trade and industry itself supported an energy watchdog to keep a tab on the regulators. It is not easy, but not impossible either, to build capabilities of stakeholders in creation of expertise in legal, technical and commercial areas with regard to distribution of electricity.

It is for this task that associations will have to prepare themselves.

We are an SSI unit in Badli Industrial Estate, Delhi. We had complained to our power distributor, NDPL, in writing in November 2003 about defective meters. They checked our meter in 2005 and declared it slow by 66%. They took one year in enhancing our load, slapped ‘misuse charges’ indiscriminately and do not respond to our complaints of power failure. What should we do?

— Ravi Sood, Neeraj Industries, S-29, Badli Ind Estate, Delhi

It is obvious that the service provider has violated the service standards as laid down by the DERC. For example, it was bound to test the meter in 15 days, as per norms. You may file a complaint in writing to the Delhi Electricity Regulatory Commission, Viniyamak Bhawan, C-Block, Shivalik, Malviya Nagar, Delhi-110017.

— Anil Bhardwaj is former, secretary-general, Fisme.