Delhi electricity tariff hike rolled back in political power play

In the real world, rarely would economics take precedence over political expediency…

In the real world, rarely would economics take precedence over political expediency. The Delhi Electricity Regulatory Commission (DERC) on Friday withdrew the up to 7% power tariff hike announced a day earlier, attributing the roll-back unconvincingly to the requirement of “some more inputs on price of fuel” from the generation companies supplying power to the capital, reports fe Bureau in New Delhi.

Analysts slammed the DERC’s volte face and warned such moves could impinge on the autonomy of the regulator, which is supposed to take rational, market-friendly decisions. Although the regulator said the withdrawal of the tariff hike was not due to pressure from political parties, few bought this as it came after criticism of the move by all political parties including the BJP, which is in power at the Centre.

The chief electoral plank of the Aam Aadmi Party, the BJP’s key opponent in the February assembly polls in Delhi, is to bring down the price of power and water in the city. Earlier this year, AAP leader Arvind Kejriwal, then chief minister of Delhi, had announced a 50% cut in tariff on power consumption up to 400 units. The subsidy to power consumers was expected to put the government back by R200 crore for the period between January and March 2014.

Explaining the withdrawal of power purchase adjustment cost (PPAC) surcharge, DERC said that it was withdrawing the earlier order as a number of power generation and transmission companies that supply electricity to the city had failed to provide the full information on fuel cost. “Further examination of additional cost of gencos (generating companies) is required. The commission has asked for more information on fuel cost from the gencos and discoms,” DERC chairman PD Sudhakar said.

Sudhakar also said that the commission had passed a provisional tariff earlier and withdrew the same after realising that it did not have complete information on the power producers and a final decision will be arrived at after complete analysis.

The PPAC approved by the commission allowed Reliance Power-promoted BSES Yamuna Power and BSES Rajdhani Power to hike tariff by 7% and 4.5%, respectively. For the Tata Power-promoted Tata Power Delhi Distribution, the tariff was hiked by 2.5%.

The increase in tariff was based on the revised PPAC formula approved by the commission in July that takes into account the variation in transmission charges and arrears payable to generation and transmission companies.

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