The cost of Delhi’s free power

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BusinessLine

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Delhi Chief Minister Arvind Kejriwal’s move to offer free power has shaken up the power sector. The announcement shatters hopes of a shift to market-driven policies easing the pressure on power distribution utilities. Last week Kejriwal in a ‘mega announcement’ declared that Delhi residents consuming up to 200 units of electricity a month will get free power. Those consuming from 201 to 400 units will get a 50 per cent rebate. But is this power free? The Delhi government has allocated ₹1,720 crore (out of ₹1,790 crore under energy sector) for providing subsidies to consumers through Power Distribution Companies (DISCOMs) in the Budget 2019-20. In the Budget 2018-19, the Kejriwal government had provisioned ₹1,815 crore for the energy sector; this was reduced to ₹1,759 crore in the Revised Estimates.

The endorsement of subsidy sets the cat among pigeons for power sector players. They were hopeful of the Centre’s push towards tariffs reflective of the cost of power supply and eventual phasing out of freebies. As per the Electricity Tariff Schedule for 2019-20 to be followed by DISCOMs, individual connections with a consumption of over 1,200 units have to pay ₹8 a unit, up from ₹7.75 a unit in the Tariff Schedule for the financial year 2018-19. A new tariff slab for non-domestic consumers has also been introduced in the new tariff schedule at ₹8.50 a unit. Overall, tariffs for other than individual connections have been hiked, reflecting higher cross subsidy in the new tariff schedule. The opposition parties in Delhi are quick to term Kejriwal’s move as a political gimmick.

As per the law, setting power tariffs and fixed costs are a prerogative of the Delhi Electricity Regulatory Commission, a declared independent body. But the Kejriwal government has been claiming credit for keeping tariffs under check too, raising questions on how independent these power distribution sector regulators are in the States.

Twesh Mishra Senior Reporter



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