'No effect on consumers' : Arvind Kejriwal on PPAC hike

With the cost of energy in Delhi rising due to a 4% increase in the power purchase adjustment fee (PPAC) imposed by discoms on consumers beginning in mid-June, Delhi Chief Minister Arvind Kejriwal claimed on Monday that the increase in PPAC will have no effect on consumers.The Chief Minister of Delhi stated, "People in Delhi who currently receive free electricity will continue to receive free electricity in the future. The power fee from 201 to 400 units is subsidised to half the rates, and this will remain. Whatever happens, the people of Delhi will continue to receive assistance. Whatever has occurred will have no effect on customers."

The power purchase adjustment cost (PPAC) is a levy levied on discoms to compensate them for fluctuations in market-driven fuel costs. According to officials, PPAC is imposed as a surcharge on total energy costs and as a set fee component of the electricity bill. Since June 11, the PPAC in Delhi has climbed by 4%.

Meanwhile, a power department official stated on Sunday that the rise was implemented by electricity distribution firms (discoms) following authorisation from the Delhi Electricity Regulatory Commission (DERC) due to increases in fuel prices such as coal and gas. "The PPAC in Delhi has been hiked by 4% as of June 11, according to DERC permission," an official source stated.

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According to directions issued by the Ministry of Power on November 9, 2021, every state regulatory commission (DERC in the case of Delhi) must implement a mechanism for automatic pass-through of fuel and power procurement costs in tariffs to ensure the effectiveness of the power sector, according to a discom official. According to him, more than 25 states and union territories have established a gasoline surcharge adjustment mechanism.

The PPAC is mandated by the Electricity Act, DERC tariff regulations, and Appellate Tribunal for Electricity (APTEL) decisions. On a monthly basis, the central regulatory body, CERC, enables central PSU gencos like NTPC, NHPC, and trancos, PPAC. PPAC, on the other hand, is granted to Delhi discoms on a quarterly basis, according to him.

The PPAC is imposed to compensate for the increase in fuel prices. According to officials, the recent decision to raise the PPAC is based on the mixing of imported coal, rising gas prices, and high prices in power exchanges, which had reached over Rs 20 per unit before being controlled by the CERC at Rs 12 per unit.

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(With inputs from agencies)