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

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 authorities.

"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 structure.

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.