After water, electricity will be the next challenge for AAP

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December 31, 2013

The Delhi government will have to incur an annual expenditure of around Rs. 5,000 crore if it decides to halve the power rates for around 40 lakh domestic consumers

December 31, 2013

The Delhi government will have to incur an annual expenditure of around Rs. 5,000 crore if it decides to halve the power rates for around 40 lakh domestic consumers

New Delhi: The Aam Aadmi Party government has lived up to its poll promise of free water supply to Delhi residents, as it announced on Monday that 20 kilo litres of free water per month (approx 667 litres per day) for households having metered water connection.

The next challenge for the party is its promise on electricity. The Aam Aadmi Party in its manifesto had promised to cut tariffs by 50 per cent and Chief Minister Arvind Kejriwal had said a decision on the issue will be made in four-five days.

Meanwhile, the Delhi Electricity Regulatory Commission (DERC), which decides power tariff in the city, has not received any request from the city government yet to cut power rates and it may take at least three months for reviewing the existing charges if such a proposal is made. DERC chairman P D Sudhakar said government has not yet contacted the regulator on the issue of power tariff.

"The government has not contacted the DERC on the power tariff issue. We are not reviewing the existing tariff structure," he told PTI. He said it may take at least three months for the DERC, a quasi-judicial body, to review the existing tariff as the regulator will have to undertake the set procedure which includes calling all stakeholders for public hearing before deciding the rates.

Power experts said government will have to take the subsidy route to implement the promise of slashing tariff as that will be an executive decision. As per estimates, government will have to incur an annual expenditure of around Rs. 5,000 crore if it decides to halve the power rates for around 40 lakh domestic consumers. According to DERC figures, the three private discoms operating in the city have a revenue gap of a whopping Rs. 19,500 crore. Power experts said any move to cut tariff will adversely impact the operation of the discoms in the city.

As per official figures, around 80-90 per cent of total revenue of discoms goes into purchasing power from central and state government owned entities through long term power purchase agreement, at rates determined by the central and state regulators. The experts said discoms' cost of buying power from generating companies has increased by around 300 per cent in the last two years while the power tariff, in the corresponding period, has risen by around 70 per cent.

"This virtually non-cost reflective retail tariff has led to a huge build-up of future receivables (regulatory assets) to the tune of over Rs. 19,500 crore, impacting the sustainability of operations of the Delhi discoms," said an expert.


Courtesy: PTI

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