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APR 08 2015

Amid row, Delhi discoms propose win-win solution

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 08th APR 2015

Tata Power Delhi Distribution (TPDDL), in a letter to the Arvind Kejriwal government, listed some measures to bring down the procurement cost of power by Delhi discoms by as much as R1.20 a unit, which could yield savings of R3,600 crore per annum for consumers. Reuters


While the Arvind Kejriwal-led Delhi government and the Delhi Electricity Regulatory Commission (DERC) are at loggerheads over power tariffs in the city, which the government feels is high and need to be explained, the three incumbent private power distribution companies (discoms) servicing the capital have come out with some practical solutions to the issue.

Tata Power Delhi Distribution (TPDDL), in a letter to the state government, listed some measures to bring down the procurement cost of power by Delhi discoms by as much as R1.20 a unit, which could yield savings of R3,600 crore per annum for consumers.

It has urged the government to reallocate power from state-run NTPC’s Badarpur coal-fired plant and Dadri and Auriya gas-based stations to other states, as these are very expensive. Among the state government’s own gas-based power capacity, the inefficient Pragati and Indraprastha units could be denied gas and the entire gas available to the state could be used at the Bawana unit capable of producing cheaper power.

The Tata discom also called for allocating a captive coal block for Aravali Power Company in Jhajjar, Haryana, so that power can be procured from the unit at competitive rates. The Delhi government holds a quarter of the stake in this plant and is allocated 700 MW from it, which is half of plant’s capacity. The other stakeholders of the joint venture include NTPC (50%) and Haryana (25%). Power from the Rajkhat coal-based unit could either be reallocated too, and if this is difficult, the plant could be shut down, said TPDDL.

The other two discoms — BYPL and BRPL — are also understood to have made similar suggestions to the Kejriwal government to reduce the procurement cost of power.

According to TPDDL, NTPC’s Dadri coal-fired station could also cease to supply to Delhi discoms if the Aravali unit is given a captive coal block.

“Despite the allocation for Delhi, the capacity (at Aravali) has been reallocated to southern states on a year-on-year basis as tariff of this plants is very high at nearly Rs 5.35 per unit. If a captive coal mine is allocated to this plant, the tariff would come down to nearly Rs 2.45 per unit,” TPDDL said in the letter.

It added that a captive coal block for an operational plant would ensure that benefits reach the consumers soon, while greenfield power plant could take seven to eight years to commence production. “These plants (that produce expensive power) supply nearly one-third of Delhi’s power requirement but the cost of sourcing from these plants is in excess of Rs 5-10/unit, which is severely impacting the power purchase costs and consequently burdening the consumers of Delhi,” TPDDL said.

An official of the distribution company told FE these plants are very old and have high variable cost. Moreover, cost of gas-based plants was high due to inadequate availability of gas while a fixed cost was being paid for the full plant capacity, the official added.

According to TPDDL, if the Bawana gas-based power plant is run at full capacity during the peak months of May-September using diverted gas from old plants with rest of the requirement to be met from spot price gas purchase, the average cost of all these plants will come down, which would translate into a tariff reduction of 30 paise per unit.

The discom has also proposed that DERC should amortise Rs 20,000 crore of regulatory assets so that principal repayment and interest cost is paid by the consumers in the monthly bills. “Currently, the consumers pay nearly nearly 60 paise per unit toward interest cost only. If DERC amortises the principal and interest amount in next five years, the impact on tariff will be nearly Rs 3 including interest cost of 60 paise per unit,” the discom official added.

As FE reported earlier, DERC responded to the Delhi government’s letter seeking an explanation for a steep tariff hike during 2011-14 saying that it was inappropriate for the government to question a quasi-judicial body through letters and added that such explanations must be sought through the appropriate forum of the Appellate Tribunal for Electricity. It further noted that the Delhi government, by virtue of being a stakeholder in Delhi discoms, was part of the tariff hike decision made by the commission.


Delhi Haryana BSES Rajdhani Power Ltd Captive BSES Yamuna Power Ltd Tata Power Delhi Distribution Limited (NDPL) Distribution Companies Captive Coal Tariff Hike Coal Gas Tariff NTPC Ltd Joint Venture Power Plant Electricity Regulatory Commission Appellate Tribunal for Electricity Coal Block Power Distribution Delhi government Delhi Electricity Regulatory Commission Power Tata Power Electricity CAPTIVE

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