Column: AAP's power shock

Dec 11 2013, 10:30 IST
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SummaryForget a 50% reduction, Aam Aadmi Party (AAP) has to be ready for a near doubling of tariffs over a few years.

called ‘regulatory asset’. An interest cost will be paid on this and, over a period of time, say when losses fall or when power prices fall, this can be paid back.

Regulatory assets in Delhi were around R1,000 crore in FY09 but went up to a whopping R20,000 crore by FY13. Given Delhi’s power consumption of 2,600 crore units a year, a one-time hike to wipe this out would mean a jump of R7.5 a unit or roughly doubling of tariffs. Servicing this at a 12% interest cost per year means a 90 paise extra cost of power each year. Since the regulatory asset has to be cleared within a 3-4 year period, a near-doubling of tariffs will take place whether or not the AAP likes it.

The solution, and again this is where the Sheila Dikshit government either wasn’t proactive or wasn’t effective, was to get the Centre to allocate a coal mine—it did so for so many less deserving—to the state or to a JV of the state and the discoms which would allow it to buy power at between R2 and R3 a unit to let the final power tariff settle at around R4-5 a unit. But since getting a coal block allocation can’t possibly send 23 lakh hearts aflutter—that’s the Election Commission number for the AAP voters—disconnecting electricity meters probably made a lot more political sense.

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