Delhi's electricity prices likely to increase; PPAC charges increase by 4% beginning today

By Team Newsable | First Published Jul 11, 2022, 2:37 PM IST

Following the approval of the Delhi Electricity Regulatory Commission (DERC), the PPAC has increased by approximately 4 per cent since June 11, 2022.

The increase in the Power Purchase Adjustment Charge is expected to raise the cost of electricity in Delhi (PPAC). Following the approval of the Delhi Electricity Regulatory Commission (DERC), the PPAC has increased by approximately 4 per cent since June 11, 2022.

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Power Purchase Adjustment Charge (PPAC) is an additional charge levied by DISCOMS on production companies to compensate for variations in market-driven fuel costs caused by increases in coal and gas prices.

According to the officials from the power distribution company (DISCOM), the PPAC is imposed to compensate for the increase in fuel prices.

A periodic review of the PPAC (every three months or every quarter) is required by the Electricity Act, DERC tariff orders, and Appellate Tribunal for Electricity (APTEL) orders.

The reason for the increase in PPAC is the inflated prices of imported coal by central coal generating stations, the increased prices of gas, and the high prices of power exchanges, which had reached nearly Rs 20 per unit before being capped by the Central Electricity Regulatory Commission (CERC) to Rs 12 per unit.

Since 2002, the cost of buying power for Delhi DISCOMs has increased by around 300 per cent, a cost over which they have no control. In comparison, the retail tariff has risen by approximately 90 per cent over the same period.

The Central Electricity Regulatory Commission allows central public service power generation companies such as the National Thermal Power Corporation (NTPC), National Hydro-Electric Power Corporation (NHPC), and transmission companies to conduct monthly PPAC reviews.

Meanwhile, the PPAC is reviewed quarterly by Delhi DISCOMS.

The DISCOMS distribution licence imposes a PPAC of 4.5 per cent without requiring regulatory approval. If the actual PPAC exceeds 4.5 per cent, the DISCOMS apply to the DERC for the differential PPAC claim. Following commission approval, the differential PPAC is charged in subsequent bills.

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