Government looking at DISCOMs

Delhi Electricity Regulatory Commission is expected to announce another tariff increase.  Last year, Delhi consumers experience a hike of 22% in their tariff plans and this time its not going to be too different.

This was expected since the last few years. The DISCOMs are in bad financial health and are not able to purchase electricity inspite of availability in the market.

DISCOMs buy electricity from the energy developers and then sell the electricity to the end-consumers. Currently the DISCOMs have been majorly involved in conventional power. With an increasing % of slightly more expensive renewable energy for DISCOMs to buy (as per the RPO), we wonder how these DISCOMs will be able to survive without government.

This not only has an impact on the payment to energy developers; but also raises questions on successful implementation of REC concept. Most of the current REC buyers make up a smaller % of the potential of REC buyers; whereas the major DISCOMs are bidding their time. They say that they are not in a financial position to purchase RECs (based on their RPOs).

One quick way is to close the increasing revenue gap of DISCOMs is to increase tariff at which electricity is sold to end-consumers. There is no question on the forecast of increasing electricity tariff. Indians across the country years, will face higher electricity costs.

The government is currently working out on a restructuring plan for the DISCOMs.The finance and power ministries are close to finalising a new package for the debt-laden power distribution firms.

But increase in electricity costs for end users is a given. Do we see solar companies smiling?

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