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NDMC supplies electricity to Rashtrapati Bhawan, Parliament House, the Supreme Court, North and South Blocks that house the most important ministries and other government buildings, along with residential areas for ministers, lawmakers and top central and Delhi government officials. Photo: AFP
NDMC supplies electricity to Rashtrapati Bhawan, Parliament House, the Supreme Court, North and South Blocks that house the most important ministries and other government buildings, along with residential areas for ministers, lawmakers and top central and Delhi government officials. Photo: AFP

Regulator seeks Lutyen’s Delhi power supply data from NDMC

The Delhi Electricity Regulatory Commission approves capex, subsequent capitalization and, hence, the need for regulator to verify utility's accounts

New Delhi: The civic body that tends to Lutyen’s Delhi, home to the country’s most powerful politicians and bureaucrats, has been lax in submitting information about its power distribution business to the electricity regulator, ignoring several directives.

The inaction by the New Delhi Municipal Council (NDMC), which hasn’t maintained separate accounts for its power business, meant the Delhi Electricity Regulatory Commission (DERC) “could not carry out detailed analysis/periodic review of various elements of expense and revenue", according to DERC’s 23 July tariff order for NDMC for 2014-15.

NDMC supplies electricity to Rashtrapati Bhawan, Parliament House, the Supreme Court, North and South Blocks that house the most important ministries and other government buildings, along with residential areas for ministers, lawmakers and top central and Delhi government officials.

It is DERC that approves capital expenditure and subsequent capitalization and, hence, the need for data for the regulator to verify the utility’s accounts.

An analysis of expenditure and revenue in NDMC’s electricity distribution arm would also have helped the regulator ascertain if there was any dressing-up of books.

DERC officials allege that NDMC tends to under-report losses, making it eligible for financial incentives.

It works like this, if a utility meets its loss-reduction targets, DERC allows capital expenditure to be built into the electricity tariff. In case a utility is unable to meet its targets, it is not allowed to do so. If a utility exceeds its targets, financial benefits accrue to the utility.

While capital expenditure costs are estimated to contribute 20% of the electricity tariff charged from consumers, power purchase costs make up the balance 80%.

“It is strange that NDMC doesn’t maintain a separate account for its electricity distribution business. In the absence of proper data, it is very difficult to fix electricity tariffs for the NDMC areas. While their losses are more, they report less," said a senior DERC official, requesting anonymity. given the sensitive nature of the issue.

Electricity is supplied in the city state by BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL), Tata Power Delhi Distribution Ltd (TPDDL), Military Engineering Services (for Delhi Cantonment) and NDMC.

“We have been issuing reminders to them (NDMC) and have even levelled some penalties. They have promised that they will implement our directive," said P.D. Sudhakar, chairman, DERC.

The regulator disallowed NDMC 10% of its budgeted capital expenditure due to non-sharing of relevant data.

As per DERC’s 23 July tariff order, “The Commission observed that the petitioner has not been furnishing the data as per the directives of the Commission since FY 2005-06 onwards; therefore, the Commission has decided to disallow 10% on even on normative figures for capitalization approved in 2nd MYT (multi-year tariff) Order."

“The Commission observed that NDMC has not been maintaining separate records/accounts for the electricity business as a separate entity for supplying electricity in the NDMC area. The Commission directed NDMC to segregate the accounts of the electricity business from other activities latest by April 1, 2010, to which NDMC has not complied with till date."

NDMC chairman Jalaj Shrivastava said that a decision was taken to appoint State Bank of India (SBI) as a consultant in April in a council meeting.

“They will take a couple of months and work out the nitty gritty of this proposal to restructure what DERC has pointed out," he said over the phone.

He added that an electricity cell will be created to separate administrative cost from tariff. “Even though we are having a profit in all of this, but because proper book keeping is not done, it appears like a loss."

“The Commission is constrained to remark that despite the assurance given by the petitioner every year that it would furnish all relevant data and audited accounts for the relevant Financial Year/s to the Commission, it has never submitted separate records/accounts for electricity business as a separate entity in any of its petitions," the DERC order added.

Delhi’s power distribution firms have a consumer base of 4.231 million customers, with a power demand of around 5,000 megawatts (MW).

P. Uma Shankar, India’s former power secretary, said, “Electricity supply accounts must definitely be separately maintained so that the cost of service of electricity is known and the tariff is reflective of it. Hopefully, there are no general subsidies to reduce power tariff."

Electricity distribution utilities such as NDMC file a tariff petition with the regulator before they can charge the consumers for electricity supplied.

“The Commission analysed the submission of the petitioner (NDMC) and observed various discrepancies. The units billed and the revenue realized by the petitioner could not be verified due to the lack of segregated audited accounts for the electricity distribution business," the DERC order said.

Neha Sethi contributed to the story.

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