Delhi chief minister Arvind Kejriwal seems to have finally managed to shut up his critics and earn new laurels by pushing the Delhi Electricity Regulatory Commission (DERC) to desist from its regular annual hikes in electricity rates for the first time in many years. His continuous efforts to focus on more efficient management of the distribution network and reduce leakages seems to be finally paying off.

This is a significant development because power consumers in Delhi has been badly hurt by rising electricity bills with the regulatory body regularly ceding to the continuous demands by distributors for propping up electricity tariffs almost every year since 2011. What is even more impressive is that the DERC orders will not only will protect the Delhi consumers from an immediate rise in electricity prices for the next six months but it has also ensure that power prices are reduced for certain categories like group housing societies which account for a substantial number of the growing middle class.

This is a remarkable turnaround as the four power distribution companies in Delhi had been hoping to secure another round of tariff hikes and had even demanded that DERC raise the prices by 16-20% this year. But the consultations with all stakeholders has not only led to a rejection of this demand by DERC but also delivered a surplus of around Rs 445 crore to the power distribution companies. This is despite the fact that DMRC has even earmarked an extra amount of Rs 573 crore in the new tariff order to start a pension trust for the 20,000 odd pensioners of the now extinct Delhi Vidyut Board.

But what is best about the new tariff orders is that Delhi power consumers can now even expect a further lowering of the electricity prices. This is because the new numbers show that the outstanding owned to the distribution companies, called regulatory assets in technical parlance, has suddenly dropped sharply by Rs 2000 crore this year prompted perhaps by the closer scrutiny of accounts by the stakeholders including the government which has successfully persuaded the CAG to audit all distribution companies for the first time since their inception.

The reduction of the outstanding burden to be paid to the distribution companies by as much as Rs 2000 crore is remarkable because this is in sharp contrast to previous trends when the regulatory asset burden has piled up regularly every year to shoot up to an outstanding Rs 12,000 crore. In fact the AAP government has been continuously pointing out that the size of the regulatory assets has been vastly inflated and has even demanded that it be completely scrapped.

A complete wipe out of the regulatory assets may perhaps have to now await the outcome of the CAG audit which will access the veracity of the accounts of the distribution companies. But even if nothing so substantial come out of the CAG audit the scenario will still change substantially as the DERC now claims that the current trends will help wipe out the gap in regulatory assets in just four years.

Apart from steady elimination of the regulatory assets the power prices to Delhi consumers will also be driven down by the firm stand taken by the DERC on the reduction in AT&C losses. It is also hoped that the move by the DERC to have a physical verification of the assets of the distribution companies and the billing audit will also help contain the regulatory assets.

However, the AAP government which question the veracity of the regulatory assets has demanded that instead of accumulating funds to wipe out the remaining balance the DERC should further reduce the electricity prices charged to the consumers. But the DERC, which explains the stability in the electricity tariff to the reduction in regulatory assets and carrying costs and the strict curbs on buying and selling of costly power by the distribution companies, seems to prefer a less radical stand.

Whatever be the real reason the Delhi power consumers can heave a sigh of relief. The new power sector reforms being rolled out by the Delhi government will hopefully usher in more competition in the distribution sector will perhaps allow the Delhi government to add to the recent gains. But one person who can claim the real credit for this turnaround is the Delhi chief minister Arvind Kejriwal who made the high electricity prices a major plank of his election campaign. One can only hope that other states where power distribution companies continue to make huge losses learn a few lessons from the Delhi experience.