#05
CAG Audit of Power Discoms
We will conduct a comprehensive performance audit of discoms by the Comptroller and Auditor General of India. Discoms shall also be brought within the ambit of the RTI act. We will ensure that the citizens of Delhi do not have to bear the burden of soaring power tariffs. Initially we will provide subsidy that would go not to the power discoms but to Delhi Transco, a state-owned transmission company which has unpaid bills of Rs 3,500 crore to be paid by the discoms. This money will help Delhi Transco upgrade and augment its transmission capacity, which is in a bad state at present. The lack of funds at Transco’s disposal is one of the main reasons for the frequent power outages in the state. After the audit results are tabled in the assembly, power tariffs will be restructured.
Project Updates

e three private power distribution companies (discoms) in the capital inflated their dues to be recovered from consumers by almost Rs 8,000 crore, the comptroller and auditor general has said in its report on the discoms and claimed that there is scope for reducing tariffs in the city. The 212-page confidential report, accessed by TOI, has indicted the three power distribution companies — BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power Ltd (BRPL) controlled by Anil Ambani's Reliance group, and Tata Power Delhi Distribution Ltd (TPDDL) — on several counts. It says the companies manipulated consumer figures and scrap sale details, and took a series of actions detrimental to consumer interests. These include buying costly power, inflating costs, suppressing revenue, dealing with other private companies without tenders and giving undue favours to group companies. Its most damning revelation relates to inflation of regulatory assets (RA) — previously-incurred losses that can be recovered from consumers if permitted by the regulatory authority. The RA of three discoms which stood approved as on March 31, 2013, were Rs 13,657.87 crore. However, audit findings contained in various chapters of this report indicate that the RA of the three discoms were inflated by at least Rs 7956.91 crore," the report says. Implementation of the audit findings could lead to a dramatic reduction in the financial liabilities of the discoms, resulting in a significant reduction in the burden on consumers. The report also raises questions over the conduct of Delhi Electricity Regulatory Commission (DERC) and government nominees on the board of the three discoms. The CAG audit endorses the claims of the Aam Aadmi Party and other activists that high power tariffs in Delhi were unjustified. The 49-day-old AAP government led by Arvind Kejriwal had ordered the special CAG audit of the power sector on January 1, 2014. Analysis shows that inefficiencies get loaded to the cost of power at several stages from the source till it reaches the consumer — that is, in generation, transmission and distribution losses — making the retail price significantly higher. There is a scope for reducing the cost of power by reducing inefficiencies at various stages," the audit report says. The CAG has also recommended that DERC review the aggregate revenue requirement (ARR, which is the gap between revenue and allowed expenditure) and regulatory assets of various years in the light of the findings. ARR and RA are the crucial figures on the basis of which tariff is decided. The report goes into detail on how the discoms bloated their regulatory assets. "The RA of discoms were inflated due to failure on the part of discoms to include certain income as NTI (non-tariff income), non/short accounting of certain other incomes, accounting errors, not bringing clerical errors in true up orders to the notice of DERC and non-recovery of wheeling charges from other licensees," the audit says. "Further, violation of DERC regulations in reimbursement of taxes, misrepresenting facts to the DERC, netting of income by expenses, misclassification of assets and claiming expenses thereon, claiming excess return on equity and carrying cost on RA has also resulted in increase in RA," it adds. The report accuses the Reliance-led discoms of "uneconomical and inefficient operations", leading to operational losses and negative net worth. These resulted in their low credit ratings. "Due to low credit ratings, BRPL and BYPL availed loans at higher interest rates. BRPL and BYPL did not declare dividend or bonus shares, however, TPDDL declared dividend and also issued bonus shares," it says. The CAG Audit on power discoms, ordered by the Delhi Government revelaed that the three private power distribution companies (discoms) in the capital enjoyed funding of more than Rs 5,000 crore from the Delhi government since their inception on July 1, 2002. The Supreme Court on Monday sought responses from three private power distribution companies on petitions filed by various bodies including Delhi government challenging High Court order that these discoms cannot be audited by the Comptroller and Auditor General (CAG) of India. A bench headed by Justice J Chelamswar asked the three discoms -- Tata Power Delhi Distribution Ltd (TPDDL), BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd - to file their responses within four weeks. Delhi Power Minister Shri Satyendar Jain on Monday ordered an inquiry to ascertain whether the Delhi administration was represented at all in the High Court and if it was, whether the representation was adequate during one year of President’s rule, in the case filed by discoms challenging the CAG audit. The inquiry will be conducted by the Senior Standing Counsel of the Delhi government in the High Court, Shri Rahul Mehra and he has been asked submit the inquiry report within one week. It may be recalled that during its 49-day stint in January/February 2014, the then Delhi government headed by Shri Arvind Kejriwal had not only ordered the CAG audit of power discoms, but had also effectively thwarted the attempts by discoms to get the audit stayed through the courts. That Government resigned on 14 February, 2014. Delhi was then placed under President’s rule and following fresh assembly elections, the present government assumed office exactly after one year on February 14, 2015. Immediately thereafter, the government appointed Dr Rajeev Dhawan, Senior Advocate to represent it before the Delhi High Court. Only two hearings took place after 14th February, 2015. The last hearing was on 02.03.2015. Dr. Rajeev Dhawan, Senior Advocate appeared in these hearings and effectively presented Delhi government’s views. Since 02.03.2015 no further hearing took place and the order was reserved by the Hon’ble High Court. In its judgment dated 30t October 2015 on the issue of CAG audit of power companies, Hon’ble Delhi High Court has made following observations at para 23, page 41 :- “Neither the senior counsel who addressed arguments for GNCTD nor any of the counsels briefing him were present on any of the earlier dates of hearing, when the other counsels had addressed arguments. We as such at the close of hearing apprised in a nutshell the senior counsel for GNCTD of the issues arising for adjudication and upon on his request the hearing was adjourned to enable him to address the same” The above observations of Delhi High Court raise serious questions on whether the GNCTD was properly represented before Delhi High Court during the one year of President’s Rule from 15t February 2014 to 13tFebruary 2015. The inquiry will look into all these aspects.

Proof

The three private power distribution companies (discoms) in the capital inflated their dues to be recovered from consumers by almost Rs 8,000 crore, the comptroller and auditor general has said in its report on the discoms and claimed that there is scope for reducing tariffs in the city. The 212-page confidential report, accessed by TOI, has indicted the three power distribution companies — BSES Yamuna Power Ltd (BYPL) and BSES Rajdhani Power Ltd (BRPL) controlled by Anil Ambani's Reliance group, and Tata Power Delhi Distribution Ltd (TPDDL) — on several counts.

Proof