Delhi's Power Dynamics: Monthly Fuel Surcharge Shake-Up

Delhi's power regulator DERC has proposed a draft to automatically impose a monthly Fuel and Power Purchase Adjustment Surcharge (FPPAS). This would allow recovery of the increased fuel cost from consumers without regulatory approval, marking a shift from the quarterly process. Feedback is being sought from stakeholders.

Delhi's power regulator, the Delhi Electricity Regulatory Commission (DERC), has announced a draft notification set to streamline the process of recovering increased fuel costs from consumers. The move sees the introduction of an automatic, monthly Fuel and Power Purchase Adjustment Surcharge (FPPAS), dispensing with the need for regulatory approval usually sought by discoms.

As outlined, the FPPAS, which reflects changes in costs linked to power supply due to fluctuating fuel prices for coal and gas, will shift from a quarterly approval basis to a monthly automated calculation, per a formula by the DERC. This adjustment aims to enhance the financial stability of distribution companies by addressing cash flow challenges related to power purchase costs.

Although sources from Delhi's distribution companies have largely welcomed the draft as a financial stabilizer, there is concern over the 10 percent cap on surcharge application, which could lead to under-recovery of costs during significant power price hikes, potentially burdening consumers with deferred expense implications.

(With inputs from agencies.)