The Hindu : New Delhi News : Power shocks for NDMC

Online edition of India's National Newspaper
Wednesday, Jun 23, 2004

New Delhi

New Delhi

Power shocks for NDMC

By Sandeep Joshi

NEW DELHI, JUNE 22. The New Delhi Municipal Council (NDMC) authorities might have succeeded this year in evading the Delhi Electricity Regulatory Commission's axe on its whopping profits from sale of electricity, but from next year those residing or having commercial establishments in Lutyens' Delhi might have to pay far less for power as compared to those living in other parts of the Capital.

As against the assured 16 per cent profit to the private power distribution companies (discoms) by the Delhi Government, the NDMC earns a handsome yearly profit. For instance, in 2002-03, the civic body's expenditure on power was Rs.342 crores while its receipts stood at Rs.520 crores, thus earning a whopping 52 per cent profit, while the respective figures for 2003-04 were Rs.380 crores and Rs.528 crores with 39 per cent profit. Interestingly, since 1998-99, the civic body's earnings from the sale of electricity have been constantly increasing.

But now the DERC might not allow the Council to earn such huge profits at the cost of its consumers. The main reason behind NDMC's huge earnings from power tariff, which forms over 50 per cent of its revenue, is the low transmission and distribution (T&D) losses in its area besides low maintenance costs, a factor which always kept the erstwhile Delhi Vidyut Board worried and is now troubling the discoms. The T&D losses in other areas of the Capital are huge, hence returns are less compared to Lutyens' Delhi. However, the power tariffs have almost remained the same in the entire Capital.

But now the NDMC might not be able to take this undue advantage of amassing huge profits, disclosed sources in the office of the DERC Chairman, V.K. Sood. From next year, the Commission would also fix the tariff for the NDMC area as was being done in other parts of the Capital. "While this year we may have seen a hike in tariff in areas where power is being distributed by the discoms, primarily to cover the proposed losses of these private firms, in the case of NDMC power tariffs might actually have to be brought down keeping in mind the profit factor in Lutyens' Delhi," they added.

Significantly, there are three tariff slabs in areas being serviced by the discoms - in the lowest slab of 0-200 units the rate is Rs.2.20 per unit; for 201-400 units it is Rs.3.60 per unit; and above 400 units the rate is Rs.4.10 per unit while the present rates in the NDMC area are -- for 0-100 unit, Rs.1.31 per unit; 101-200 units, Rs.1.58 per unit; 201-400 units, Rs.3.15 per unit; and over 400 units, Rs.3.78 per unit.

But how the NDMC succeeded in evading the DERC's axe this year is yet another interesting story. As the December 2003 deadline for tariff revision started approaching, the discoms and the government's power transmission company - Transco - submitted their ARRs (annual revenue requirements) to the DERC, but the NDMC failed to do this. Under the new Electricity Act that came into force last year, the DERC has been empowered to fix the tariff of NDMC area, unlike in the previous years. Then began the process of sending reminders to the civic body.

"In the beginning of this year, at least three reminders were sent to the NDMC but no reply came from their side. So finally, Mr. Sood shot off a letter to the NDMC Chairperson warning that he would fix the tariff for Lutyens' Delhi on his own if the civic body failed to file its ARR immediately. It was then the NDMC apologised for the delay and requested the DERC to postpone the tariff revision in its area for a year. Thus, the NDMC succeeded in its effort of earning more profit from the sale of electricity for another year," the sources added.

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