The Power Purchase Adjustment Charges (PPAC) have been sharply reduced in Delhi which will provide a relief to the city’s consumers who can expect lower electricity bills now, officials said on Friday (December 27, 2024).

A statement of Delhi government said the PPAC was slashed drastically in a “new year bonanza”, bringing down electricity bills for all consumers.

“Delhi government has been able to reduce PPAC due to honest politics and robust demand supply chain management, said Chief Minister Atishi who also holds power department portfolio.

Earlier, discom officials said that in September, PPAC of Tata Power Delhi Distribution Limited (TPDDL) was 37.88 per cent, BSES Yamuna Power Limited (BYPL) 37.75 per cent and BSES Rajdhani Power Limited (BRPL) 35.83 per cent.

The revised PPAC in December is 20.52% for TPDDL, 13.63 per cent for BYPL and 18.19% for BRPL, they said.

“This will lead to a significant cut in the monthly electricity bills of the consumers,” an official stated.

BJP’s Delhi unit president Virendra Sachdeva said it was a victory of party workers as the BJP has been protesting against discoms and the AAP government for “looting” honest consumers in the name of PPAC.

He said the charges have been reduced due to the BJP’s protests and an intervention of LG V K Saxena.

Atishi said if BJP is so keen on taking credit it should reduce power prices in 22 states governed by them.

Citing Delhi Electricity Regulatory Commission (DERC) orders, Sachdeva told a press conference here that the “PPAC imposed by the three discoms has been reduced by more than 50%, and resultantly the consumer bills will be reduced by 20-25%”.

The PPAC is added to the electricity bill to compensate for any increase in the cost of power during procurement due to factors like rise in fuel prices, changes in policies among others.

It is calculated as a per cent of the sum of the fixed charge and energy charge (units consumed) in power bills.

The PPAC is levied under the Electricity Act, Rules and APTEL orders. The Central Electricity Regulatory Commission (CERC) allows central gencos like NTPC, NHPC and transcos to make full recovery of their costs on a monthly basis.

On the other hand, Delhi discoms are allowed PPAC on a post-facto quarterly basis with the approval of the DERC.

The PPAC is recovered to ensure a timely pass through of the adjustment cost charges to the consumer as any delay further burdens the consumer with interest cost, officials said.

Also, without PPAC, discoms will have liquidity stress and won’t have money to pay the generation companies, they added.

This charge revision is a huge relief for power consumers of Delhi as the PPAC has been significantly reduced by the DERC, said East Delhi Resident Welfare Association Front president BS Vohra.

The charges kept increasing continuously in the last few years burdening the middle class, he said expecting more reduction in charges.

In case of BRPL and BYPL, the existing PPAC was applicable till December 20, 2024.

In the current PPAC approved by an order, dated December 20, passed in case of BRPL and BYPL, the DERC has allowed only the recovery of costs for Q2 of FY 24-25.

In case of TPDDL, the existing PPAC is applicable up to January 31, 2025. Its petition is pending before the DERC which may announce a fresh PPAC in coming weeks.

The Delhi government said the PPAC was higher earlier as Delhi experienced an unprecedented peak in electricity demand due to severe summers. The discoms purchased electricity at prevalent market rates, leading to higher PPAC, it said.

Additionally, in October 2023, The blending proportion of expensive imported coal was increased from four per cent to six percent, resulting in higher costs for generating companies, it said.

The PPAC declined in winters in accordance with reduced demand and consumption of power and also because the blending proportion of imported coal was also reduced back to four per cent by mid-October 2024, it said.