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Your power bill may go up every three months

Hindustan Times | ByAvishek G Dastidar, New Delhi
May 06, 2010 10:53 PM IST

A new formula is being worked out to hike your electricity bills every three months, even as the power distributors (discoms) for the first time asked the Delhi government to bail them out by lending Rs 700 crore to meet a perceived cash crunch.

A new formula is being worked out to hike your electricity bills every three months, even as the power distributors (discoms) for the first time asked the Delhi government to bail them out by lending Rs 700 crore to meet a perceived cash crunch.

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Sources said the Delhi Electricity Regulatory Commission (DERC) has in principle agreed to consider a new financial tool for discoms allowing them to charge a variable “fuel surcharge” in the electricity bills every quarter.

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Thus, the power tariff will be reviewed every three months, as the fuel-surcharge component will help discoms recover the extra money they pay to power generators whenever the cost of gas or coal used to produce the power increases.

The power generators charge this monthly, over and above the per-unit cost of power they sell, if the input cost of coal or gas goes up.

Discoms have been complaining that this causes a bleeding of their cash as they recover the extra money only two years later when their expenses are trued up, while borrowing to meet expenses now.

“The government, the discoms and the DERC are on the same plane on this. This is one of formulas to ease the deadlock over tariff setting,” said a source on the condition of anonymity.

Discoms assure that just like there would be a hike on some months, there could also be a decrease in the electricity bills when the fuel cost in power generation runs low.

“Around 17 states have started this new system of adjusting tariff based on the variable fuel cost. This adjustment only happens through audited accounts through prescribed guidelines so that there is transparency for consumers,” he said.

‘Bail us out’
For the first time the three discoms — BSES Yamuna, Rajdhani and North Delhi Power Limited — have sought a combined Rs 700 crore from the Delhi Power Company Limited (DPCL), the holding company through which the government owns its share in the discoms.

“We have sought Rs 400 crore as loan from the government,” Sunil Wadhwa, CEO, NDPL, told Hindustan Times.

This loan comes from what is called the Power Sector Stabilisation Fund, which charges a mighty 13 per cent interest — more than market rates. Discoms said they had no other choice as banks have refused to give money saying their operations were unviable.

Discoms are in the black
But the audited accounts still show healthy Earnings Per Share (EPS) in each discom. The EPS is one of the surest, industry accepted ways of gauging a company's financial health as perceived by banks, investors, etc.

While BRPL’s EPS went from Rs -2.36 to Rs 4.06, BYPL’s jumped from Rs 4.97 previous year to Rs 6.63 and NDPL’s doubled from Rs 3.11 to Rs 6.48 last financial year.

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