Delhi Report Card 1: Has the AAP government lived up to its promises on power?

SPECIAL SERIES: DELHI ASSEMBLY ELECTIONS 2020

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This article is part of our special series on Delhi Elections 2020

 

2014 AAP manifesto promise

  • Will ensure quality power supply and reduce citizens’ electricity dues by 50 per cent
  • Delhi to be made a solar city
  • CAG audit of discoms
  • Adequate street lighting
  • Delhi to have its own power station
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At 80 plus, Raj Rani Bhalla who lives with her working daughter in a four-bedroom apartment in East Delhi, manages every aspect of her household. The matriarch reads all the news relevant to her, and keeps an eye on all the discounts of food essentials in the stores in her neighbourhood. The former government employee has seen plenty of life and politics in the national capital and never fails to do her duty by democracy as an unfailing voter.

So when the Aam Aadmi Party promised to halve the power bill of residents of the capital territory in the winter of 2013, repeated it in 2014 and is repeating the promise again for the February 2020 assembly elections, she initially took it lightly. But she got a pleasant surprise when she saw her electricity bill of last August. She had to pay only about Rs 1700 though the bill was for a little over Rs 2500. It was the lowest electricity bill she had paid in a long, long time. It happened the next month too. But even more joy awaited her. The bills for November and December 2019 showed 0 —zero!

Malini S, a resident of the plush Azad Apartments near IIT Delhi, rarely bothered to take a close look at her monthly electricity bills which were generally over Rs 6000. It took her some time to notice that she has been getting a “rebate/subsidy” of Rs 761 in her bills since last August.

But the biggest saving has been for the poor in the various resettlement colonies dotting Delhi. “My electricity bill has been zero the last five six months though I don’t believe in giving or receiving anything for free,” said Dinesh Kumar, who lives in Geetha Colony where almost all the unbranded jeans and jackets sold in Janpath or Sarojini Nagar’ s flea markets are made in small units. Dinesh, who runs the most bustling tea shop in the capital’s Fleet Street, doubts if this can go on forever, but said honest politicians not taking cuts can definitely fund it from taxes they receive. Everyone in his neighbourhood is thrilled, because like Dinesh, they too have got the subsidy on electricity consumption that translates to a considerable saving every month

[Above are pics of pre-subsidy and post-subsidy electricity bills received by Raj Rani Bhalla. Pic: Vijaya Pushkarna]

There is joy in the refugee colony of Tilak Nagar too, where Kritika Singh earlier used to get monthly bills of around Rs 1100. Since August she has been getting “Zero dues” bills. As also Surinder Singh Bisht who lives in a matchbox- sized room in the narrow lanes of congested Lakshmi Nagar. In Chattarpur, driver Arif Khan, too does not have to pay any electricity bill these days.

AAP CLAIM

24X7 electricity

Provided free electricity up to 200 units and half up to 400 units

Actual benefits

Across Delhi, from those living in small tenements to residents of big bungalows, everyone has benefitted, to some extent, from AAP’s promise to reduce their power bills.

Ever since it came to power, for 49 days in 2013 and for five years in 2015, AAP has, in its manifesto, promised and claimed that it had reduced citizens’ electricity dues by 50 per cent. The first time Chief Minister Arvind Kejriwal made that promise, applicable to those who consumed upto a maximum of 400 units a month, was three days after he became chief minister of Delhi on Dec 28, 2013. He also slashed the cost of power to consumers from Rs 5 per unit to Rs 2.90, though this was reviewed and revised later with certain caveats.

While consumption upto 200 units got a 20 per cent subsidy, consumption between 201 to 400 units got 35 per cent subsidy. Those who consumed more than 400 units got no subsidy and had to pay the full price from the very first unit. According to Kejriwal, the subsidy covered 28 lakh out of 34.61 lakh power consumers in the capital. But consumers were slow to realise or appreciate the move, and Kejriwal had to resign as chief minister, with Delhi put under president’s rule, till Kejriwal returned to power in 2015 with a thumping majority.

Though the independent regulator Delhi Electricity Regulatory Commission (DERC) negotiates with the discoms and decides the bulk, grid and retail tariff, as well as transmission costs, the Delhi Government provides the subsidy, bridging the shortfall through budgetary allocations. The DERC, set up in 1999, also has to regulate the power purchase and procurement process, including transmission and distribution, and set the price at which power shall be procured. Besides, it promoted competition, efficiency and economy within the electricity industry.

The very next year, the Delhi government enacted the Delhi Electricity Reform Act, 2000, and the list of tasks before DERC went up to 16. The most important additions were to ensure a fair deal for customers and to forecast demand and publish the data. It also was to aid and advise the government on policy issues.

Subsidised electricity was something the nascent political party was determined to do. A Jan Lok Pal and devolution of power to people through Swaraj were also promised, but it was the slashing of power bills and the free 20,000 litres of water that caught public imagination and dominated political discourse.

AAP’s manifesto spelt out how it would cut electricity bills:

“A more efficient, transparent and accountable system to regulate and audit power generation and distribution companies is the need of the hour and AAP will do everything within its command to achieve that. Discoms should purchase power from economical sources and wriggle out of expensive and unsustainable Power Purchase Agreements. AAP will take measures to provide relief from rising power bills, namely by generating cheaper electricity, improving transmission efficiency, fixing billing defects and correcting meter defects.”

When there were power outages in the winter of 2018, the Kejriwal government took up the matter with DERC, which directed the discoms to compensate consumers for power cuts.

Creating a buzz

But there was no buzz about the implementation. To make matters worse, in March last year, the DERC increased fixed charges across all slabs—for 2-5 kw from Rs 35 to Rs 140; for 5-15 KW from Rs 45 to Rs 175; for 15-25 kw from Rs 60 to Rs 200; and for more than 25 KW, from Rs 100 to Rs 250. So in August last, the Kejriwal government tweaked the subsidy scheme that enabled more people receiving an electricity bill to notice the reduced amount and the subsidy they were getting.

In fact, Kejriwal announced a 100 per cent subsidy for those who consume up to 200 units for power a month, and Rs 800 off their bills for those consuming between 201 to 400 units. “For the first time, the Delhi government will be covering the fixed charges and surcharges of domestic consumers with a sanctioned load of up to 5 kW,” an officer explained. Simultaneously, the power regulator slashed the fixed charges for those with 0-2 kW, 2-5 kW and 5-15 kW load.

Fixed charges, one component of electricity bills, are levied on the connected or sanctioned load. Like data plans of telecom service providers, the load is the total wattage of all the bulbs, fans, air-conditioners and electrical appliances being used in a home (one Kilowatt load is 1000 watts). The DERC reduced the fixed charges for domestic consumers from Rs 125  to Rs 20 a kW a month for load upto 2 kW, from Rs 140 to Rs 50 a month  for sanctioned loads between 2kW to 5 kW , and from Rs 175 to Rs 100 a month for loads between 5kW to 15kW.

With this, even those consuming between 400 units to 1200 units and having a sanctioned load of up to 15kW saw a reduction in their power bills. According to an officer in the Delhi government, the scheme that Kejriwal called “smart governance” implies that anyone consuming between 201 to 250 units, with a sanctioned load of 2kW, ends up saving as much as 68 per cent on their power bills.

“The formula is such that if a household consumes 400 units a month, it can enjoy the maximum benefit if it has a sanctioned load of 5 kW. Which means, if I consume 400 units with a load of 2kW, I would save only about 18.56 per cent on the bill. But if I shift to 5kW the savings would go up to 28.43%,” explained the officer.

Which essentially meant that a household with 5kW load will save Rs 90 per kW on account of lower fixed charges, and also get about Rs 800 by way of subsidy on 400 units, taking the total reduction to about Rs 1250 a month. And a household with 2kW load, will save Rs 105 a kW and Rs 800 for 400 units, a total of Rs 1010.

Consequently, from August 2019 onward, the implementation of the high voltage election promise made in 2015, which has been carried forward into the 2020 elections, not only became far more visible to voters, but shocked the Bharatiya Janata Party and the Congress. Manoj Tiwari, president of the Delhi unit of the Bharatiya Janata Party, charged the AAP with “fooling the people” and maintained that the subsidised electricity scheme will “expire in March 2020”.

10 Guarantees

Undeterred, Kejriwal expanded the scheme to include tenants under the “Mukhyamantri Kirayedar Bijli Meter Yojana” to cover tenants who produce a rental lease deed. And in his “Guarantee card” release last week, subsidised electricity was again one of the 10 guarantees he gave the voters of Delhi.

There were other equally vote-securing guarantees—–better and cheaper transport, world class school education, and substantial reduction in air pollution, along with cleaning the Yamuna and waste management. All of these directly touches the lives of people, like free rides for women in buses run by the Delhi Transport Corporation which has been on for a few months now and has been promised for students as well. But the electricity subsidy is likely to resonate strongly with voters.

“This subsidy mechanism is so generous that over 80% of homes get the subsidy,” said Brookings India fellow Rahul Tongia in the think tank’s Impact Series Papers of 2017. “Due to its monthly nature, outside the extended summer, some 90-96% of consumers qualify. This is not just the common man, but even the rich!” The subsidy has since been extended to benefit more people.

The fiscal cost of these subsidies have been quite substantial. In its first year in office, the AAP government had allocated Rs 1200 crore for power subsidy. The next year it went up to Rs 1577 crores, then to Rs 1697 crores in 2017-18 and in Rs 1759 crores for 2018-19. In its 2019-20 budget, an allocation of Rs 1720 crore has been made, but that was before the latest tweaking of the scheme. The subsidy is now expected to cost the government Rs 2500 crore annually.

Incidentally, Kejriwal had also promised to make Delhi a solar city by facilitating a phased shift to renewable and alternative sources of energy, with incentives to individuals, housing societies and enterprises and industry. The AAP had also maintained it was committed to ensuring that 20 per cent of Delhi’s energy needs are met through solar energy by 2020. That, however, is still work in progress.

As electricity subsidy turned up the heat on the upcoming assembly election campaign, Kejriwal came up with his side of the narrative: “I did not buy an airplane for myself,” he said, “We have given free facilities to the people by saving on extravagant spending. We are providing 24-hour free electricity. Electricity bills of most people are coming out (to be) nil”.

Taking a dig at the BJP in particular, Kejriwal pointed out, “Each MP gets four thousand units of electricity free but when the poor get 200 units of electricity free, then these ‘netas’ have a problem. The opposition is saying that all these schemes will stop after the election. Today, I am announcing that when our government returns to power, the free services will all continue for the next five years. You will get 200 units of electricity free for the next five years.”

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About Vijaya Pushkarna 7 Articles
Vijaya Pushkarna is a journalist based in New Delhi. She was formerly Deputy Bureau Chief, Delhi at The Week.

2 Comments

  1. An interesting article on an important topic. I read the article twice since I got confused after reading the article as you can see. I would appreciate if my doubts can be cleared. I am interested in the topic to understand how did AAP actually keep the promise of halving the power tariff while maintaining the fiscal balance. It almost sounds like we can have free lunch which cannot be true.

    “AAP had promised to halve the electricity bill. Mrs Bhalla’s bill was zero in Nov and Dec 2019. Malini who was paying Rs 6000 per month started to get a subsidy of Rs. 761 since August, 2019. Dinesh Kumar was getting zero bill for the last five to six months. Krtika Singh in Tilak Nagar has also been getting zero bills since August, 2019. AAP claims that it has reduced electricity bills by 50%.

    Article states at one place that subsidy announced was 20% up to 200 units, 35% from 201 to 400 units and zero after that.”

    I am giving the above quotes for my confusion.

    While the article giving the examples of Bhalla, Malini and Kumar creates an impression Delhi residents are getting “free electricity” since few months. Of course this is not true though the author ends up creating that impression at least in my case. Later the author after giving the new fixed charges shows how DERC reduced the fixed charges. There is no explanation as to how DERC reduced it. Since it is easy to reduce fixed charges by transferring to actual use through tariff increase, it would have been useful had the author explained why and how this happened. Did the government asked to reduce these fixed charges? After all some one has to pay it – either consumers through higher tariff or the government through higher subsidies or the generating/transmission companies by improving the efficiency or through reducing its rate of return.

    Having created the impression that AAP has met the promise of halving the electricity bill, it ends by showing how actual bill has reduced only by 18.56% for consumers with 2KW load, and by 28.43% for consumers with 5 KW. What happened to the implied claim of 50% savings?

    I agree that AAP has certainly reduced power bill by doling out subsidy. But as we all know there is no free lunch in this world. What impact this had on the budget? On the other hand if we find out that AAP managed to reduce power bill without having a “significant” impact on the budget (you told me that they even had a surplus) then one needs to appreciate it.

    Look forward to getting some explanation.

    regards
    Bhamy

  2. The AAP manifesto indeed said they would halve the electricity bills. People did not believe they would be able to implement the subsidy. Today it is not half for all, it is free for some and a saving of about Rs800 for those who consume less than 400 units, and absolutely no subsidy for those who consume more than 400 units.

    When they assumed office in 2013, they spelt out the subsidies– 20% up to 200 units, 35% from 201 to 400 units and zero after that. It would have reduced the bills to half for some, not all power consumers, but the government was gone in 49 days. When Arvind Kejriwal returned to power in 2015, it continued that way, and so there was no buzz about the power subsidy.

    That is when, in Aug 2019—a few months before the assembly elections of Feb 2020 –, the Delhi government tweaked the scheme, announcing a 100 per cent subsidy for those who consume up to 200 units for power a month, and Rs 800 off their bills for those consuming between 201 to 400 units. It is since then that the bills came to zero for those who consumed less than 200 units, and others got a subsidy of 800 rupees. It helped that October, November weather in the capital is very pleasant: you don’t need ACs or heaters, so many people saved Rs800 a month. Those who ran up over 400 units got no subsidy.

    The DERC is mandated to fix the tariff –fixed load charges as well as power tariff for consumers, so it did, not from their pockets or reducing the price they pay. The gap on account of the subsidy was bridged by the Delhi government through budgetary allocations.

    The Delhi government has paid for the power subsidy without impacting their budget adversely, and they say, it is their prudence –no frivolous expenses on themselves, Now, the Congress has said they will give free electricity upto 300 units, and the BJP has said they will continue to the AAP subsidies on power if elected!

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