Power bills in the national capital have increased from 2% to 6%, starting mid-June, with power regulator Delhi Electricity Regulatory Commission (DERC) allowing distribution companies (discoms) to levy an “additional” power purchase adjustment cost (PPAC) surcharge on consumers to offset a rise in coal and gas prices and the increased dependency on short-term power purchases (STPPs), officials in the know of the matter have said.
No immediate reaction from DERC was available. The PPAC is a surcharge to compensate the discoms for variations in the market-driven fuel costs. It is applied as a surcharge on total energy cost and fixed charge component of an electricity bill, officials said. “The PPAC in Delhi has been increased by 4 percent from June 11, according to the approval of the DERC,” said an official source.
According to the Ministry of Power directions on November 9, 2021, every state regulatory commission (DERC in the case of Delhi) has to place a mechanism for automatic pass-through of fuel and power procurement costs in tariff for ensuring the viability of the power sector said a discom official.
Prior to the Central Electricity Regulatory Commission (CERC) capping power exchange prices at ₹12 per unit, they had reached almost ₹20 per unit, which was higher than the inflated prices of imported coal charged at the central coal generating stations, increased gas prices, and higher power prices.
The cost of buying power for Delhi DISCOMS has reportedly climbed by almost 300 percent since 2002, a cost over which DISCOMS has little control, while the retail pricing has increased by about 90 percent during the same time period, according to officials.
The DERC order, said, “I am hereby directed to convey that the Commission in accordance with Regulation 172 of DERC (Terms and Conditions for Determination of Tariff) Regulations, 2017 and Regulation 37 of DERC (Business Plan) Regulations, 2019 provisionally allows additional PPAC of 6%, 4% and 2% to BYPL, BRPL, and TPDDL respectively, from the date of issuance of this letter, over and above the approved (PPAC).”
The DERC’s order stated that the additional PPAC has been allowed because of the deteriorated cash-flow position of power utilities, the non-inclusion of short-term power purchase (STPP) in the PPAC formula, the increased dependency on STPP in April and May 2022, and the impact of blending imported coal in power production as well as the increase in gas prices.
Explaining the reason behind the additional PPAC, the power regulator said that BRPL (BSES Rajdhani), BYPL (BSES Yamuna), and TPDDL (BSES Tata) have reported cash deficits to the tune of ₹168 crores, ₹132 crores and ₹61 crores, respectively, in the month of April 2022.
Further, BSES Rajdhani reported a cash deficit of ₹166 crores for May 2022, while BSES Yamuna reported a cash surplus of ₹38 crores. The order said BSES Yamuna deferred power purchase payments of ₹163 crore and delayed other expenses amounting to ₹74 crore due to a cash shortfall.
“BRPL has submitted that they could not meet their payment obligations fully and deferred power purchase payment for April ’22 and May ’22 amounting to ₹178 crores. TPDDL has submitted that they have met a cash shortfall of ₹422.92 crores through short-term loans,” the DERC said.
In May this year, Delhi chief minister Arvind Kejriwal had said his government will provide a power subsidy to only those residents of the national capital who would “opt” the same. “From October 1, only those consumers who opt for it will be provided the subsidy,” he had said during an online briefing on May 5. At present, consumers in Delhi get a “zero” power bill of up to 200 units of electricity and a subsidy of ₹800 on consuming 201 to 400 units of power per month.
PPAC is required by the DERC’s Electricity Act. On a monthly basis, the central regulatory commission (CERC) grants permission to central PSU gencos like NTPC, NHPC, and trancos (PPAC). Delhi discoms, on the other hand, are permitted PPAC once every three months, the official noted.