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Delhi govt has no powers to restrict DERC on tariff order: SG

Last Updated: Friday, May 21, 2010 - 22:43

New Delhi: In a major embarrassment for
the Sheila Dikshit government, Solicitor General Gopal
Subramanium has held that it has no powers to restrict the
city`s power regulator DERC from announcing its tariff order
for the year 2010-11.
In an unusual move, the city government had on May 4
-- a day before the scheduled announcement of the tariff order
-- had directed Delhi Electricity Regulatory Commission not to
announce it till the regulator get a go-ahead from the state

"The direction contained not to pass tariff order
unless a go ahead has been given by the state government
amounts to placing a fetter on a quasi-judicial function. Such
a direction is ultra vires and therefore void," Subramanium
said in a letter to DERC which had requested his opinion.

Following the reply from Subramanium, the second
highest ranking law officer in the country after the Attorney
General, sources in DERC said they may announce the new tariff
order "very soon".
The government had forced DERC not to announce the
tariff order apparently coming under pressure from the three
private power distribution companies which had complained that
their demand for increasing power tariff has not been
considered by the regulator while finalising the new tariff

The DERC, which was making last minute preparations
to announce the new tariff for the year 2010-11, after
receiving the government directive had indicated that it had
planned to cut down the tariff by 20 to 25 per cent as discoms
would have a surplus of around Rs 4,000 crore if the existing
tariff was not tinkered with.

Subramanium also cited various Supreme Court rulings
while giving his opinion on the issue, which has created a
simmering rift between DERC and the government.

On whether DERC should respond to the government`s
order to furnish a detailed report on the issue, he said it
would be improper for the DERC to "disclose details of its
quasi-judicial activities or details of the tariff order that
is about to be passed."

The DERC will have to give its statutory advice on the
approach in principle to the various issues without
jeopardising its quasi-judicial function, which cannot be
controlled by the state government, he said.

The discoms have been demanding a substantial hike in
power tariff for the fiscal 2010-11 claiming that the total
combined deficit of three discoms stood at Rs 2,600 crore.

However, the DERC had indicated that all the discoms
are having a very healthy surplus in their kitty and there was
no need for any hike in tariff.

Seeking a "cost reflective tariff structure", the
three discoms -- BYPL, BRPL and NDPL -- said they had bought
power at a very high rate during last summer following a
communication from DERC where it was stated that money would
not be an issue.

The discoms, bolstered by government`s sympathetic
approach towards their demand, had also held a press
conference on May 6, defying a DERC gag order, where they had
accused the authority of taking a "myopic approach" towards
their "justified demand" for a hike in tariff.

In view of the opinion of the Solicitor General, DERC
Secretary Amarendra K Tewary has written a letter to Delhi
Power Secretary Rajendra Kumar, saying that the tariff orders
for all the discoms must be issued, without any further delay.

Meanwhile, BJP welcomed the opinion of Subramanium`s
opinion and demanded early release of the tariff order.

"Our only demand is that there should be no hike in
tariff," said senior BJP leader V K Malhotra.


First Published: Friday, May 21, 2010 - 22:43
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