The three Delhi distribution companies (discoms) have challenged the Delhi Electricity Regulatory Commission (DERC) business plan regulations in the Delhi High Court, seeking an interim stay. The DERC business plan regulations were issued in March 2023 and set out a framework for the discoms to submit their annual revenue requirements (ARRs) to the DERC.
The DERC will then use the ARRs to determine the tariffs for electricity in Delhi.
According to sources, the discoms have argued that the regulations are illegal and violate the Electricity Act, 2003. As directed by the DERC, Delhi power utilities have submitted their ARR’s for FY 2023-24. However, many aspects of the tariff determination process being followed by the DERC are in contravention of the laid down guidelines and prevailing law.
For one, the Return on Equity (ROE) is an intrinsic part of the Delhi privatisation model. The DERC’s Business Plan Regulations have reduced this from 16% to 14% against these very tenets putting the viability of the power sector in Delhi into question. This is not aligned with the CERC framework and guidelines.
Sources said that the discoms have challenged the regulations on a number of grounds.
First, they argue that the regulations violate Section 61(a) of the Electricity Act, which requires the DERC to be guided by the principles and methodologies for tariff adopted by the Central Electricity Regulatory Commission (CERC).
