Discoms to get more strident on tariff hike
Richi Verma, TNN, May 20, 2010, 01.16am IST

NEW DELHI: The capital's power distribution companies (discoms) have just got more ammunition to demand a higher tariff. With the Centre increasing the price of government-controlled gas, the cost of electricity produced from gas-based plants is also likely to rise, which gives discoms another reason to demand a hike in power tariff. This year's tariff announcement has been delayed after Delhi government's intervention.

Delhi Transco officials said that any adjustment in fuel costs will be decided by NTPC and bodies like Pragati Power Corporation (PPCL). "NTPC will go to Central Electricity Regulatory Commission (CERC) which will then decide the revised rates for power from gas-based plants in the central sector. At present, it is difficult to predict the revised rate,'' said officials. But energy experts said that after incorporating transmission costs, there could be a considerable hike in power tariff.

Discoms reason that since up to 80% of their total spending is towards purchasing power, any hike in electricity cost will push up the tariff. "Most of the gas-based plants are operating under combined cycle operations. It means that it is for the producers to decide any changes. Delhi gets a fair amount of electricity from gas-based plants. The new plants, which will supply power to the capital, are also gas-based. There will be an impact but it is for the regulator to decide any revision in the tariff. For us, costs will increase due to our long-term power purchase agreements (PPAs),'' said Gopal Saxena, CEO, BSES Rajdhani.

However, Delhi Electricity Regulatory Commission (DERC) officials declined to comment on whether the hike in gas price would affect consumer tariff in Delhi. "The regulator has to give the entire cost of power purchase to distribution companies. This cannot be compromised. But since no one knows what the tariff order of 2010-11 says, it will be incorrect to speculate whether power tariff could be affected by this. In any case, there is always a considerable margin incorporated in tariff orders taking into account future projections and costs,'' said a senior DERC official. Officials added that the margin was decided in consultation with top experts from the power sector.