Ending power monopolies

Make BSES in Delhi a test case

With a large number of citizens in the capital complaining of electricity bills that are up by between 50 and 100 per cent, the point gets reinforced that, though the Delhi government has privatised electricity distribution, it needs to continue protecting consumer interest. This was also evident a few weeks ago when it was found that the Anil Ambani-controlled BSES, one of the two companies running the distribution firms in the capital, had not contracted enough electricity supplies to meet peak summer demand. While Chief Minister Sheila Dikshit has given the expected tongue-lashing to BSES, the distribution company which has the maximum number of complaints, she needs to figure out a more permanent solution.

BSES argues that the peak summer heat was unusual this year and ascribes the higher electricity bills to this factor, apart from the fact that the Delhi government has withdrawn the 10 per cent subsidy it gave last year. These arguments are unconvincing, because the Tata-managed New Delhi Power, which runs the distribution network in a part of the city, has not shown similar hikes in electricity bills. What this calls for is an independent check to establish the real story in the BSES-serviced areas of the capital.

The systemic solution is to get the electricity regulator (and this applies equally to Mumbai) to implement what was promised in the Electricity Act way back in 2003. This law says that, within five years, regulators across the country would ensure that anyone with electricity demand of more than 1MW (that’s a mid-sized apartment complex) would be allowed to buy power from anyone across the country on payment of an ‘open access’ surcharge. The law also says the regulators would allow open access to progressively smaller and smaller customers. In the case of Delhi, this would mean that residents of an apartment complex should have the freedom to buy power from NDPL instead of from BSES, and vice versa. The problem is that while several regulators, including the one in Delhi, have notified the rules, there has not been a single instance of open access. In some cases, the government-owned load dispatch centres claim they do not have enough capacity to move the electricity; in others, the distribution companies act tough with consumers who want to move away. The regulators need to figure out why no customers are getting open access and ensure that it happens. The way it was conceived, open access was to have been made available to customers at even the individual household level in a short time. Once open access becomes reality, consumers can no longer be held to ransom by any company, and choice will ensure that tariffs fall. If Delhi’s chief minister is serious about reforming the capital’s power sector, she needs to push the regulator to make open access a reality and prevent customers from becoming captives of the distribution companies.