The Hindu : New Delhi News : Sheila's tough stand keeps tariff hike low

Online edition of India's National Newspaper
Friday, Jun 11, 2004

New Delhi

New Delhi

Sheila's tough stand keeps tariff hike low

By Lalit K. Jha

NEW DELHI, JUNE 9. The 10 per cent tariff increase announced today by the Chairman of the Delhi Electricity Regulatory Commission, V.K. Sood, could have been several times higher but for a last-minute intervention by the Delhi Chief Minister, Sheila Dikshit.

In a meeting with Mr. Sood before leaving on her foreign tour, Ms. Dikshit is understood to have expressed serious reservations over DERC's proposal to effect a 30 per cent increase in electricity rates. Instead, at the long meeting, during which, the former Delhi Power Minister, Ajay Maken, who is now the Member of Parliament from New Delhi, was also present, the Chief Minister is believed to have pointed to serious discrepancies in the functioning of the power discoms managed by the private companies.

Besides referring to the poor power supply position in the Capital despite surplus availability of electricity and large-scale local faults, she is understood to have pointed out the failure of the BSES to spend even one-fifth of the sanctioned amount for improving and strengthening the local distribution network. It is because of this meeting that the tariff order was delayed by about ten days, sources said.

Ms. Dikshit is believed to have argued for "penalising" the discoms for their non-performance instead of burdening the consumers with substantial increase in electricity rates. "There is a need to make these discoms accountable otherwise these companies will start taking things for granted," Ms. Dikshit is believed to have told him. Probably this is the reason why, Mr. Sood, who thus far was seen to be soft towards the discoms, imposed a penalty of Rs. 1 crore each on the BSES Yamuna Power Limited and the BSES Rajdhani Power Limited. No penalty has been imposed on the North Delhi Power Limited.

Conceding for the first time that power supply position in Delhi was far from satisfactory, as frequent load shedding and tripping continued and there was no let up in billing errors, Mr. Sood expressed serious concern over the poor capital expenditure programme of the BSES. "This is the reason, why we have imposed such a hefty penalty on the discom," he said and signalled that poor performance of discoms in future may invite severe penalties. In fact, Mr. Sood too conceded that he consulted Ms. Dikshit on the issue of power tariff arguing that there was nothing wrong in this as the Government was the largest stake holder in the Capital's power sector.

It is only after Ms. Dikshit's hard talk in which she suggested to Mr. Sood to look for other options, besides the Government subsidy, that the DERC created a new "Regulatory Asset" much to the disappointment of the discoms. "This Regulatory Asset of Rs. 696 crores has been created to protect the consumers from any tariff shock. This would be serviced over time with the improvement in loss reduction," he said. While the Delhi Transco has been assigned a Regulatory Asset of Rs. 100 crore, NDPL of Rs. 192 crore, and the BSES have been created an asset of Rs. 404 crores. While the discoms, first reaction was that it would badly hit them financially, Mr. Sood said: "This would force the discoms to perform."

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