DERC issues tariff regulations after a year-long gap

The process to effect a possible power tariff hike in Delhi has been initiated with the DERC announcing the muli-year tariff (MYT) regulations, which will form the framework of the petitions to be filed by the discoms.
The Delhi Electricity Regulatory Commission (terms and conditions for determination of tariff) regulations, 2017, issued on February 1, shall remain in force till amended or repealed by the Commission.
The last MYT, which had expired in March last year, had a duration of four years.
"The MYT regulations announced by the DERC are the first in the tariff setting process. Discoms are analysing it and will take necessary action as desired by the Commission," sources in the power sector said.

Discoms, BSES and TPDDL, will now be able to submit their claims of profit and losses to DERC, in the form of ARR (Annual Revenue Receipt), and make their cases for a hike in tariff.
Despite stiff demand for increase from the discoms citing revenue gap, there was no tariff hike in Delhi last year, the first time since 2011.

In 2015, there was a hike of around 6 per cent, levied in the form of Power Purchase Adjustment Cost (PPAC). Around 80 per cent of a discom's costs go towards purchasing power.
PPAC is a surcharge given to the discoms to compensate variations in the market-driven fuel costs like additional costs on account of increase in coal and gas prices.

"Since privatisation in 2002, there has been an increase of around 300 per cent in the power purchase costs. On the other hand, the retail tariff has increased by around 90 per cent. This has led to a huge revenue gap and cash flow mismatch," discom officials say.
Presently, those consuming up to 200 units a month pay Rs 4, while those falling in the 201-400 bracket pay Rs 5.95 per unit. The rate for every unit between 401 and 800 is Rs 7.30.
Last year, discoms had demanded bridging of the revenue gap, pegging it at around Rs 36,000 crore up to 2015-2016.

The Revenue Gap on a standalone basis for 2016-17 of BSES discoms was around Rs 1500 crore while the same was Rs 700 crore for Tata Power (TPDDL).