While it is not clear whether the Aam Aadmi Party will be able to lower electricity tariffs in Delhi as quickly as it had promised, given the high cost at which the discoms buy the power and given the R11,000 crore owed to them (till FY12), there was always one way in which tariffs could be cut. And that was through introducing competition, or ‘open access’ in electricity jargon. So, if person A’s house is connected to a BRPL line, she can get NDPL to supply her power through the same line. While NDPL will pay BRPL a charge fixed by the regulator, the possibility of competition will force both firms to get a lot more efficient.
Problem is, apart from the cross-subsidy surcharge that is used to compensate BRPL for losing a good customer—it is these revenues that allow BRPL to supply below-cost to other customers—the Delhi regulator has put in an additional surcharge that is 30 paise per unit in April-July but between R1-3 for the rest of the year. While this is to compensate the discoms for losing customers though they have signed up long-term power purchase agreements—it is lower in April-July because other customers can be found in the peak months, but between 3-9 am in these months, it is R1.3 per unit—it defeats the very purpose of more competition since it will no longer be profitable to switch suppliers after paying such high surcharges.