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Power distribution companies of Delhi, UP, Bihar, J&K persistent defaulters of Hydro CPSEs: CAG report

This is despite the fact that hydro power is sold much cheaper than thermal power as the latter requires continuous supply of coal.

A recent report from the Comptroller and Auditor General of India (CAG) has named power distribution companies of Delhi, among others from UP, Bihar and J&K, as persistent defaulters of Hydro Central Public Sector Enterprises (CPSE). The report, likely to be presented in the parliament in the next few days, comes after a draft CAG report in August had indicted three power discoms of Delhi of inflating dues worth Rs 8,000 crore.The report, a copy of which is with dna, states that the Delhi discoms BSES Rajdhani Power Limited (BRPL), BSES Yamuna Power Limited (BYPL) along with Uttar Pradesh Power Company Limited, Power Distribution Department, J&K and Bihar State Electricity Board have failed to clear dues of National Hydroelectric Power Corporation (NHPC), Satluj Jal Vidyut Nigam Limited (SJVN)and Tehri Hydro Power Complex (THDC), which has compounded to a whopping Rs 4112.49 crore in 2014-15, as against Rs 397.95 crore in 2009-10.<!– Dna_Article_Middle_300x250_BTF –>This is despite the fact that hydro power is sold much cheaper than thermal power as the latter requires continuous supply of coal. The average market price of hydro power is Rs 2.25 to Rs2.50 per unit as against the average price of thermal power which ranges from Rs 3.80 to Rs 4.50 or even more.The CAG report also states that Delhi’s three discoms namely BRPL, BYPL and Tata Power Delhi Distribution Limited (TPDDL) had not executed fresh agreements with hydropower CPSEs like NHPC, SJVN and THDC (only for BYPL) even though Delhi Electricity Regulatory Commission had allocated the power generated from them to the discoms.The report warns that the power supply situation in the capital could take a serious hit if the Hydro CPSEs execute the provisions of Central Electricity Regulatory Commission (Regulations of Power Supply), 2010, which empowers them to reduce the power drawing schedule of defaulting beneficiaries in the light of the dues to be recovered from discoms/State Electricity Boards.Defending their stance, a spokesperson from BSES said they are owed Rs 10,000 crore by both its discoms which the Delhi Electricity Regulatory Commission (DERC) had also admitted in its affidavit to the Supreme Court.”With the true-up for FY 14 and FY15, total money owed to BSES discoms is around Rs. 20,000 crore. When these amounts are cleared, dues to power utilities will be paid appropriately,” the spokesperson said.Talking about the delay in execution of fresh agreements with the hydro CPSEs, the spokesperson informed that some Power Purchase Agreements (PPAs) have recently expired, hence and that the BSES discoms are in discussions for their renewal on terms and conditions that would be beneficial for the Delhi consumers. “As per regulation, DERC approval is required for extension of PPAs on merit,” the spokesperson said.Similarly, a statement from TPDDL stated, “TPDDL continues to procure power from the stations of SJVNL and NHPC on the same terms and conditions as were present in the PPAs signed by erstwhile DVB/DTL. TPDDL has been pursuing SJVNL/NHPC for signing of supplementary agreement on same terms and conditions and their response/ signing of PPA is still awaited.”In the last few years, the cumulative dues of all the three Delhi discoms have compounded to nearly 30,000 crore. They suffered a big blow in September when the DERC in September refusing to hike power tariff rates till March 2016.In financial year 2014-15, the revenue gap for BRPL stands at Rs1,507crore, while in 2013-14, it stood at Rs837 crore. For BYPL, the revenue gap amount for 2014-15 stands at Rs1,020 crore and for 2013-14, it was Rs1,126 crore.According to industry experts on power, Delhi gets nearly 100% of its power from Central and State power generating stations like NTPC, which turns out to be more expensive as compared to other cities.“The cost of buying power for Delhi’s discoms has increased by around 300% while around 85% of the total discom cost is for purchasing power. After their privatisation, the discoms are unable to buy power at a lower rate, because of the long-term PPAs with power generators. Even DERC has not increased power tariff resulting in increased regulatory assets for the discoms,” a power expert said.Sources said the only option that can be availed by the debt-ridden discoms is the latest UDAY scheme announced by the central government that is aimed at easing the financial crunch faced discoms all over the country.Former power secretary Anil Razdan said it is important for discoms to carry out 100 per cent metering and reduce AT&C (aggregate technical and commercial) losses to decrease their revenue losses.

Delhi: Another power tariff hike on cards shortly?

The DERC is in the process of finalising the tariff for 2015-16 and is likely to announce the new rates by the end of August after taking views of various stakeholders including the consumers.

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Citing the widening revenue gap of around Rs 28,000 crore, Delhi’s three private power distribution companies have pitched for early announcement of annual tariff revision.The companies, which have sought up to 20% hike in tariff, have communicated to DERC about the resource crunch being faced by them owing to steep rise in power purchase cost. The Reliance Energy-backed BSES discoms has petitioned the Delhi Electricity Regulatory Commission (DERC) for upto 19% hike, while Tata Power Delhi Distribution Ltd (TPDDL) has demanded an increase of 20%.The DERC is in the process of finalising the tariff for 2015-16 and is likely to announce the new rates by the end of August after taking views of various stakeholders including the consumers. Making a case for hiking tariff, the discoms have argued that their combined revenue gap due to absence of a cost-reflective tariff has gone upto Rs 28,000 crore and the financial position would worsen further if there was no increase in rates.<!– Dna_Article_Middle_300x250_BTF –>The total under recoveries of BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd have risen to Rs 20,000 crore while for TPDDL, it has been estimated at Rs 8,000 crore, as per the discoms. On June 12, the DERC had hiked tariff by upto six% to compensate the discoms for rise in power purchase cost. The AAP government had strongly criticised the DERC for the hike. DERC chairman P D Sudhakar said the discoms have been buying 95-98% of power as per provisions of the long-term power purchase pacts signed between erstwhile Delhi Vidyut Board (DVB) and state-run power utilities like NTPC.Power experts said Delhi discoms have to incur 60% more cost on buying power compared to other states because of the long-term power purchase. The DVB, which used to supply electricity in Delhi, was disbanded in 2002 as part of reforms in the power sector. However, the private power distribution companies were made to comply with various pacts DVP signed with central government entities.Sources in the DERC said it was yet to take a decision on hiking tariff again which may escalate its confrontation with the AAP government. Power tariff was a major issue for AAP during the Delhi polls. The Kejriwal government had in February announced a 50% subsidy on monthly power consumption upto 400 units till the government receives the CAG report on financial condition of the discoms.In its first stint, the AAP government had ordered a CAG audit of all the three discoms, claiming they have been misleading the government and the DERC about their financial position. The city has seen a series of hikes in power tariff in the past two years. The tariff was hiked by 22% in 2011 followed by 5% rise in February 2012. The rates were increased by up to 2% in May 2012 and again by 26% for domestic consumers in July 2012.It was hiked by up to 3% in February 2013 and again by 5% in August 2013. It was increased by upto 7% in November last year. The cost of buying power has increased primarily on account of an increase in the input prices of raw material like coal and gas, officials said.According to official figures, around 80-90% 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.

Power regulator DERC to announce revised tariff despite AAP govt’s objections

The Delhi government had asked the DERC not to hike tariff till the CAG submits its report on finances of the discoms.

The Kejriwal government had in February announced a 50% subsidy on monthly power consumption of up to 400 units till the government receives the CAG report on financial condition of the discoms.
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Delhi’s power regulator DERC is all set to announce revised tariff for 2015-16 next month notwithstanding AAP government’s directive not to go ahead with the new rates till the CAG has submitted its report on the financial condition of three private power distribution companies.Sources in Delhi Electricity Regulatory Commission (DERC) said the tariff determination process was going on and it will announce the new rates, which may see a marginal hike, even if the government had strong reservations about it.On June 12, the DERC had hiked tariff by upto six per cent as it restored a surcharge to compensate the private distribution companies for rise in power purchase cost. The AAP government strongly criticised the DERC for the hike and said it was exploring legal option against the decision.<!– Dna_Article_Middle_300x250_BTF –>”We are going ahead with the tariff determination process. It is an annual exercise. We are analysing the financial details of the discoms and take decision accordingly,” said a top official in the DERC.The Delhi government had asked the DERC not to hike tariff till the CAG submits its report on finances of the discoms.Power tariff was a major issue for AAP during the Delhi polls. The Kejriwal government had in February announced a 50% subsidy on monthly power consumption of up to 400 units till the government receives the CAG report on financial condition of the discoms.In its first stint, the AAP government had ordered a CAG audit of all the three discoms, claiming that they have been misleading the government and the DERC about their financial position.The city has seen a series of hikes in power tariff in the past two years. The tariff was hiked by 22% in 2011 followed by 5% rise in February 2012.The tariff was increased by up to 2% in May 2012 and again by 26% for domestic consumers in July 2012.It was hiked by up to 3% in February 2013 and again by 5% in August 2013. It was increased by upto 7% in November last year.The cost of buying power has increased primarily on account of an increase in the input prices of raw material like coal and gas, officials said.The DERC effected the hike of upto 6% on June 12 following an order by Appellate Tribunal of Electricity which had asked the DERC to pass on Power Purchase Adjustment Cost (PPAC) to the private power distribution companies within three weeks.The DERC said the PPAC surcharge has been approved considering claims of the discoms for last three quarters beginning July, 2014.The DERC had introduced PPAC in 2012 to help the private power distribution companies recover additional cost on account of increase in coal and gas prices.Delhi gets power from a number of gas and coal-based generation plants. The DERC had withdrawn the PPAC in July.