Highlight
- The cost of electricity in Delhi has increased with the increase in Power Purchase Adjustment Cost (PPAC.)
- PPAC is a surcharge that compensates DISCOMs for variations in market driven fuel costs.
- More than 25 states/UTs have implemented fuel surcharge adjustment formula
Delhi News: With the increase in the cost of electricity in Delhi, the Power Purchase Adjustment Cost (PPAC), passed on by discoms to consumers, has been hiked by 4 per cent since mid-June, official sources said on Sunday.
A power department official said that the power distribution companies (discoms) have taken the hike due to the increase in the prices of fuels such as coal and gas after the approval of the Delhi Electricity Regulatory Commission (DERC).
No immediate response from DERC was available.
PPAC is a surcharge to compensate DISCOMs for variation in market driven fuel cost. Officials said this is applicable as a surcharge on the total energy cost and the fixed charge component of the electricity bill.
“The PPAC in Delhi has been increased by 4 per cent with effect from June 11, as per the approval of DERC,” an official source said.
As per the instructions of the Ministry of Power dated November 9, 2021, each State Regulatory Commission (DERC in case of Delhi) will have to put in place a mechanism for automatic pass on of fuel and power purchase cost in the tariff to ensure viability of the power sector, A discom official said.
He said that more than 25 states/UTs have implemented fuel surcharge adjustment formula.
PPAC is a requirement under the Electricity Act, DERC’s own tariff orders and orders of the Appellate Tribunal for Electricity (APTEL). Central Regulatory Commission, CERC allows Central PSU Gencos like NTPC, NHPC and Trancos, PPAC on monthly basis. Delhi Discoms, on the other hand, are allowed PPAC on a quarterly basis, he said.
PPAC is levied to offset the increase in fuel prices. In the latest instance, the decision to increase PPAC is based on the blending of imported coal, rise in gas prices and higher prices in power exchanges, which reached around Rs 20 per unit before CERC capped it at Rs 12 per unit . unit, officials said.
Since 2002, the cost of purchasing power for Delhi discoms has increased by nearly 300 percent, a cost over which discoms have no control; While retail charges have increased by almost 90 per cent in the same period, the discom official claimed.
The discom distribution license levies a PPAC of 4.5 per cent without going through regulatory proceedings. If the actual PPAC is more than 4.5 per cent, the DISCOM files an application to DERC for a separate PPAC claim. After approval from the Commission, the difference is charged to the PPAC in subsequent bills.
BJP MLA and Leader of Opposition in Delhi Assembly Ramvir Singh Bidhuri demanded the Kejriwal government to immediately withdraw the hike.
He alleged that the Kejriwal government was increasing the electricity rates through the back door in the name of PPAC.
He said that on the one hand, the Kejriwal government has imposed conditions on the scheme of electricity subsidy, and on the other hand, has increased the price of electricity in the name of adjustment cost of power purchase.
Besides, the domestic and commercial rates in Delhi are among the highest in the entire country, he claimed. Domestic consumers of Delhi have to pay around Rs.8 per unit and commercial consumers up to Rs.14.
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