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DISCOMs want higher tariff to recover expenses during Covid

Twesh Mishra New Delhi | Updated on August 30, 2020 Published on August 30, 2020

Power distribution companies (DISCOMs) in the national capital want fixed charges to remain and even go higher to recover investments. The demandcomes after commercial and industrial consumers sought a waiver on recurring charges during the Covid-19 lockdown period.

Consumers in the national capital are served by five power distribution companies. Major DISCOMs are Tata Power Delhi Distribution Ltd, BSES Rajdhani Power Ltd, and BSES Yamuna Power Ltd. Two other DISCOMs are under the New Delhi Municipal Council (NDMC) and Military Engineer Services (MES) Delhi.

According to DISCOMs, the fixed charges are essential for infrastructure development and they are liable to collect them on behalf of power generation and transmission companies. According to Power Ministry officials, the fixed charges cannot be done away with because they help ensure that loans taken by power generation companies are accounted for and paid back to the banks.

Fixed charge or demand charge is designed to recover the costs such as the capacity charges payable to power generators, transmission charges, operation and maintenance expenses, depreciation, interest on loans, return on equity among others. This is generally recovered based on sanctioned load, connected load, contract demand or maximum demand of the consumer, a Delhi Electricity Regulatory Authority (DERC) Approach Paper on Tariff Rationalisation had said.

The call for doing away with fixed charges had gained momentum during the lockdowns after business activities stalled but electricity bills continued to be generated. The bills during this period had a larger proportion of fixed charges because electricity consumption had plummeted.

While the waiver did not happen, the Delhi Electricity Regulatory Commission (DERC) decided that there will be no tariff hike for fiscal 2020-21 due to the pandemic. DERC also ruled that the existing provision of 20 per cent Surcharge under Time of Day Tariff for September will be waived. This was being done to help non-domestic, industrial, public utilities and domestic consumers (optional) among others in the current Covid situation, the DERC said.

Reacting to the order, a spokesperson for Tata Power Delhi Distribution Ltd (Tata Power-DDL) said, “For DISCOMs, the tariff order will substantially increase the financial challenges and hence the ability to ensure 24x7 power supply. The tariff declared by the DERC will result in an increase in the Regulatory Assets (difference between the costs required to serve the customers and the revenue from tariff) which is already at a precariously high level of about ₹23,139 crore for all the DISCOMs in Delhi as on March 2020.”

“Early liquidation of the Regulatory Assets (RA) is in the interest of all stakeholders including consumers as high RA increases tariff for consumers. Also, it puts the reliable power supply of Delhi at grave risk as financial institutions are extremely reluctant to fund the DISCOMs as there is no clarity on the roadmap of liquidation of these assets,” the spokesperson added.

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Published on August 30, 2020
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