Since May 1, residents and businesses in Delhi have been grappling with increased power bills as electricity tariffs have risen significantly. This surge, noticeable in the July bills, has not stemmed from a revision in the basic electricity tariff by the Delhi Electricity Regulatory Commission (DERC) but rather from a spike in the Power Purchase Agreement Cost (PPAC).

Understanding PPAC and Its impact

The PPAC is a surcharge added to power bills to cover additional costs due to fluctuations in power purchase costs incurred by the distribution companies (discoms). These costs often vary due to changes in coal and other fuel prices, which have recently seen a significant increase. The quarterly revision of the PPAC is the primary driver behind the recent hike in power bills.

Detailed PPAC revisions by discoms

Data reveals that the PPAC has increased markedly for all major discoms in Delhi:

– BSES Rajdhani Power Limited (BRPL), serving South and West Delhi, has seen its PPAC rise to 35.83%.

– BSES Yamuna Power Limited (BYPL), serving East and Central Delhi, now has a PPAC of 37.75%.

– Tata Power Delhi Distribution Limited (TPDDL) has experienced a PPAC increase to 37.88%.

– The government-owned New Delhi Municipal Council (NDMC), covering the most affluent areas, has the highest PPAC at 38.75%.

Officials have indicated that the discoms have revised the PPAC within a range of 6.75% to 8.75%, attributing this increase to higher coal and fuel prices.

Specific increases in PPAC

For the four major discoms in Delhi, the specific increases in PPAC are:

– BRPL and TPDDL: 8.75%

– BYPL: 6.15%

– NDMC: 8.75%

With these hikes factored in, the total PPAC now stands at 35.8% for BRPL, 37.8% for BYPL, 37.9% for TPDDL, and 38.8% for NDMC.

Financial impact on consumers

The rise in PPAC has led to noticeable increases in monthly power bills. According to an illustration by the Times of India:

– A consumer using 600 units of electricity in the BRPL area will see their bill rise from Rs 4,523 to Rs 4,802.

– In the BYPL area, the bill will increase from Rs 4,667 to Rs 4,863.

– For TPDDL consumers, the bill will go up from Rs 4,588 to Rs 4,867.

– In the NDMC area, the bill will rise from Rs 4,616 to Rs 4,895.

Exemptions and government subsidies

This adjustment has not affected consumers who receive subsidies for using up to 200 units. Delhi has around 6.5 million domestic electricity consumers, with about 60% of them benefiting from free electricity for consumption under 200 units during winter months. The Delhi government provides a 50% subsidy for monthly consumption between 201 and 400 units.

The necessity of PPAC increases

Officials have noted that delaying the PPAC increase could further burden consumers since it recovers costs already paid by discoms. They emphasised that the PPAC is a statutory mandate, with the process being transparent and validated by the regulator. Without the PPAC, discoms would face liquidity stress, impacting their ability to pay power generators and maintain an uninterrupted power supply.

Future outlook

Despite political contention, the rise in PPAC ensures that discoms maintain financial health to continue supplying reliable electricity to Delhi’s consumers. The PPAC is levied as a percentage of the base tariff, which includes fixed costs and energy charges. During summer months, when power is purchased from the Electricity Exchange to meet increased demand, the PPAC is often higher, especially during heatwaves.

Delhi’s power consumers are now facing significant hikes in their electricity tariffs due to the recent revisions in PPAC by various discoms. These revisions, while a financial burden, are crucial for the sustained financial health of the discoms and the uninterrupted supply of electricity to the city.