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Friday, 30 January 2015 04:31
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AAP acts responsibly, Congress for cheaper power

This has to be the biggest irony of the Delhi elections: while the Aam Aadmi Party (AAP) is no longer promising huge cuts in electricity prices, the Congress Party wants to reduce rates by nearly half for consumers using less than 200 units of power in a month, from the already subsidised R2.8 per unit to as low as R1.5 per unit. It is apparent that, having failed to cut rates by 50% the last time it was in power—indeed, rates went up due to the regulator’s surcharge put during the AAP’s 49-day government—the AAP wants to act responsibly while, with not even an outside chance of winning, the Congress doesn’t mind coming up with populist promises. The BJP, which is yet to come up with a manifesto, is playing it safe and promising to cut power costs by distributing LED bulbs at low prices—in other words, it is making no commitments on whether power costs will be cut.

While the AAP’s white paper on Delhi’s power scenario repeats its demand for a CAG audit before clearing the ‘regulatory assets’ of R13,700 crore—the three electricity distribution companies (discoms) are claiming another R5,000 crore each year for FY14 and FY15 and R4,500 crore due to appellate tribunal orders—what’s interesting are the other points being made. For the first time ever, the AAP is blaming high consumer tariffs on generating companies—Delhi’s bulk supply tariff is R5.5 per unit as compared to R3.7 in Gujarat and 3.5 for 15 states. While the party wants an audit of the Anil Ambani-owned BSES discoms—BSES won the gold-plating case in the Appellate Tribunal and it is now in the SC—it cites the group’s Sasan ultra mega power project tariffs of R1.2 per unit versus the R1.75-6.15 per unit that NTPC and
R1.77-12.21 that NHPC are selling power to Delhi’s discoms for. The AAP suggests, as FE has been recommending, a captive generating power plant of the Delhi government to lower costs—FE had added that a captive coal mine be allotted to the power plant to keep costs low.

In exactly the same manner that the AAP is talking of captive generating capacity for Delhi, all political parties need to sit down and find a solution to the regulatory asset problem. If the numbers put out by the discoms are accepted, just the interest cost on regulatory assets would mean hiking electricity tariffs by R1 per unit each year—capital payments could triple the amount if the repayments are made over 3-5 years. Doing this could involve using central power sector reform funds or concessional financing from REC/PFC. Short point is, there is no easy solution to Delhi’s power tariffs, and politicians would do well to not fool the electorate.

 

 

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