"It is a good move from the point of view of consumers. It will provide them relief. I welcome the decision by the government," Tata Power Delhi Distribution Ltd (TPDDL) CEO Pravir Sinha said.

The Aam Aadmi Party (AAP) government on Tuesday announced a 50 percent subsidy on power consumption up to 400 units in Delhi.

Power rates cut by 50 percent

When asked about Government's move to order CAG scrutiny of the finances of the three private power distribution companies, Sinha chose not to comment but said TPDDL will comply with the law.

He, however, said TPDDL was responding to government's directive of making their stand clear on the CAG scrutiny of the companies.

"If the law of the land demands that (the CAG audit), we will definitely comply with the directive. We will comply with all the statutory and administrative laws and regulations," Sinha said.

TPDDL supplies power to 13 lakh consumers in North and North West parts of Delhi. The other two companies – BSES Yamuna Power Ltd and BSES Rajdhani Power Ltd -- supply power in rest of the areas in the city except areas under jurisdiction of New Delhi Municipal Corporation.

Asked whether Delhi Electricity Regulatory Commission will be under pressure not to hike electricity rates even if power purchase cost by distribution companies goes up due to rise in cost of fuel such as coal and gas, Sinha said the regulatory commission is "very independent" and it will take correct decisions.

The DERC is likely to begin this month the tariff revision process for the year 2014-15.

"My understanding is that today regulatory commissions are very independent and they have a duty to perform. They are also strictly monitored by the appellate authority. My feeling is that the correct thing will be done by the regulator," Sinha said.

According to DERC figures, the three private discoms operating in the city have a revenue gap of whopping Rs 19,500 crore.

It is learnt that discoms have been preparing to seek a hike in tariff to recover the accumulated revenue gap.

As per official figures, around 80-90 percent of total revenue of discoms goes into purchasing power from Central and state government owned entities through long term power purchase agreement, at rates determined by the central and state regulators.

The experts said discoms' cost of buying power from generating companies has increased by around 300 percent in the last two years while the power tariff, in the corresponding period, has risen by around 70 percent.

The power tariff in the city was hiked by 22 percent in 2011 followed by five percent hike in February 2012. The tariff was hiked by up to two percent in May 2012 year and again by 26 percent for domestic consumers in July 2012 The tariff was hiked by up to three per cent in February last year and again by five percent in August last.


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