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When Aam Aadmi Party's leader Arvind Kejriwal decided to resign as Chief Minister of Delhi, he left behind a system in chaos along with unfulfilled promises.
To his credit, he had all the right ideas that would appeal to a common man, but he faltered in his implementation. Take the case of electricity tariff which was considered to be his trump card in winning the elections. He promised tariffs to be reduced by 50 per cent in his manifesto and did announce it too when he came to power, but the same could not be implemented because Kejriwal did not follow the rules.
Given that electricity tariffs have been used by all political parties as a tool of appeasement over the years, which is the primary cause of poor availability and quality of power, Central Electricity Regulatory Commission (CERC) had taken away this power from the politicians and given it to the regulatory commissions in each state. If the state government still wanted to offer freebies, they could do so by way of subsidies. Furthermore, the subsidy amount had to be made available to the Commission before the start of the month.
Kejriwal while announcing the tariff cut said that he would subsidise the amount to be paid to Tata Power only and the amount due to ADAG companies would be adjusted against the money that the group owed to the Delhi government owned power generating units. However, there is no provision for such adjustments in the rule book. CERC is clear in its rules where it has said that all subsidies have to be made upfront. Further, Kejriwal and his party in their haste to reduce tariffs failed to see that there was a bigger amount that was due from the regulatory commission to the Anil Ambani group, which no one was willing to talk about.
Delhi enjoyed one of the lowest tariffs over the years, even before the subsidy announced by the Aam Aadmi Party. The reason for this was that Sheila Dixit's government did not increase power tariffs for five years despite the rising cost of power generation. In the last 10 years, power tariffs have increased by 65 per cent while cost of generating power went up by 300 per cent. A large chunk of the higher cost of power was absorbed by companies by cutting their distribution costs and proper billing. However, there was still a deficit which was partly recovered by increasing tariffs by 45 per cent in a span of two years.
During the interim, power companies kept on building losses on account of the differential between cost of power generation and sales. This loss is known as regulatory asset, which is nothing but the amount that is not yet paid despite electricity being sold. The amount so piled up has increased to Rs 11,431 crore.
Delhi Electricity Regulatory Commission (DERC) has now allowed these companies to recover dues for the years when prices were not increased. DERC needs to be credited for capitalising on the political vacuum to push through this tariff rise. It would be difficult for them to push for higher tariffs in the current political environment had there been a government heading the state. DERC has played a politically correct game of allowing the final change only after the Comptroller andAuditor General (CAG) presents its findings on the charges made by the Aam aadmi party.
It is likely that the next government that comes to power in Delhi would like to subsidise power, even if not by 50 per cent but still by a substantial amount. These subsidies will now be applicable on the revised tariff rates.
Power companies would thus recover some part of the amount that is due to them, power consumers might get the benefit of lower tariffs but the subsidy element of the Delhi government would rise. But that is something no political party is bothered about. After all subsidies also end up being funded by the tax payers.
