Delhi Government Announces Significant Reduction in PPAC for Electricity Consumers

The Power Purchase Adjustment Charges (PPAC) in Delhi have been significantly reduced, offering relief to consumers with lower electricity bills, officials announced. The Delhi government stated that this reduction is a new year gift, lowering electricity costs for all users. Chief Minister Atishi attributed the decrease to honest governance and effective demand-supply chain management.

Earlier, in September, the PPAC rates were 37.88% for Tata Power Delhi Distribution Limited (TPDDL), 37.75% for BSES Yamuna Power Limited (BYPL), and 35.83% for BSES Rajdhani Power Limited (BRPL). By December, these rates had dropped to 20.52% for TPDDL, 13.63% for BYPL, and 18.19% for BRPL. This reduction will lead to noticeable savings on monthly electricity bills.

Political Reactions and Statements

BJP's Delhi unit president Virendra Sachdeva claimed this reduction as a victory for party workers who protested against discoms and the AAP government over PPAC charges. He credited BJP protests and LG V K Saxena's intervention for the reduction. Atishi countered by suggesting BJP should lower power prices in the states they govern.

Sachdeva highlighted that according to Delhi Electricity Regulatory Commission (DERC) orders, the PPAC imposed by the three discoms has been cut by more than half, reducing consumer bills by 20-25%. The PPAC is added to bills to cover increased power procurement costs due to factors like fuel price hikes and policy changes.

Technical Aspects of PPAC

The PPAC is calculated as a percentage of the fixed charge and energy charge units consumed in power bills. It is levied under the Electricity Act, Rules, and APTEL orders. The Central Electricity Regulatory Commission (CERC) allows central generation companies like NTPC and NHPC to recover their costs monthly.

In contrast, Delhi discoms are permitted to apply PPAC on a post-facto quarterly basis with DERC approval. This ensures timely cost adjustments are passed to consumers, preventing additional interest burdens. Without PPAC, discoms would face liquidity issues and struggle to pay generation companies.

Impact on Consumers

East Delhi Resident Welfare Association Front president BS Vohra expressed relief over the reduced PPAC, noting that charges had been rising continuously, burdening the middle class. He anticipates further reductions in charges. The current PPAC for BRPL and BYPL was applicable until December 20, 2024.

The DERC's recent order allows only cost recovery for Q2 of FY 24-25 for BRPL and BYPL. For TPDDL, the existing PPAC applies until January 31, 2025, with a pending petition before the DERC that may announce a new PPAC soon.

Reasons Behind Previous High Charges

The Delhi government explained that earlier high PPAC rates were due to an unprecedented peak in electricity demand during severe summers. Discoms purchased electricity at market rates, leading to higher charges. In October 2023, expensive imported coal blending increased from four percent to six percent, raising generation costs.

As winter approached, reduced demand and consumption led to a decline in PPAC rates. Additionally, by mid-October 2024, the blending proportion of imported coal returned to four percent, further decreasing costs.