Discom's accounts didn't show extra fuel cost: DERC

NEW DELHI: Just days before the swearing-in of Arvind Kejriwal, whose party manifesto has promised to reduce power tariff in the capital by 50%, Delhi Electricity Regulatory Commission (DERC) last week rejected the discoms' petitions for another hike as power purchase adjustment costs (PPAC).

While BSES Rajdhani, BSES Yamuna and Tata Power declined to comment on the order till receiving it officially, sources claimed that the decision would aggravate the discoms' already precarious financial situation.

"Even in the past, the fuel adjustment costs allowed by DERC have been less than what was sought. The latest denial is going to hit the companies financially when they are already burdened with rising costs," said a discom official.

The discoms had sought hikes between 3% and 6% based on extra expenditures incurred by them from July to September 2013, but DERC said that it didn't find any additional expenditure while scrutinizing the discoms' accounts. "We did not feel discoms had incurred any additional expenses during this period, so PPAC has not been allowed," confirmed DERC chairperson P D Sudhakar.

Experts feel the DERC decision is likely to open the door for a CAG audit of discoms. The government under Kejriwal, who also holds the power portfolio, is expected to make announcements on power and water in the next two days. Industry experts believe that slashing tariff by 50% is not possible without a subsidy. "Only DERC can decide tariff as per the Electricity Act and the only step the government can take is announcing a subsidy," said an expert. Indications are that the government may soon announce a subsidy.

Discoms had earlier appealed against DERC orders in Appellate Tribunal of Electricity. However, when DERC had introduced fuel adjustment cost in the tariff order last year, there was one quarter in which the commission had not allowed any additional hike based on fuel costs.

The discoms have been complaining for the past five years that tariff is not cost-reflective and even the hikes since 2011 have failed to help them bridge their regulatory assets gap. The two Reliance companies owe the government-backed Transco and generation companies IPGCL and PPCL Rs 4,000 crore.