Also Read: Tata Power welcomes tariff cut, says audit issue sub-judice
The tariffs remain the same, but instead of the consumer the government will now have to pay for it, he says. He does not expect the Delhi government commissioned Comptroller and Auditor General, or CAG, audit to be a problem for power companies.
Below is the verbatim transcript of P Uma Shankar's interview on CNBC-TV18
Q: Because of the subsidy which the Delhi government provides, what might be the impact on the finances of the power discoms?
A: The government has decided to provide subsidy up to a consumption of 400 units. This would mean that the power companies rates would be the same as declared by the regulatory commission but the subsidy will be then going through the distribution companies. So they will not suffer on account of the lower rates that the consumer would ultimately pay because it is going to be subsidized by the government. I don't think the distribution companies as such would be affected financially by this decision. So the point was that slashing of rates is not the level of tariff that is decided by the regulatory commission but for the end consumer so the distribution companies will not suffer on this account.
Q: There is no question of the Delhi government being able to slash tariffs isn't it, that would have to go through the DERC. So this is basically a subsidy, the tariff remains the same but instead of the consumer the government pays it.
A: That is right. See the process for fixing tariffs is very clear. The regulatory commission will consider a petition submitted by the distribution companies. They then go through public hearings on the petition that is given by regulatory commission and then come to tariffs. So this is the statutory role that is given to the regulatory commissions and state governments cannot decide these tariffs. In fact the regulatory commissions were setup with the amendment in the act in 2003 to move away from a regime where government used to decide tariffs. Government cannot go back and say that we will decide the tariffs, it is not possible. So at best what the government can do is to provide a subsidy to any category of consumers if they think that the tariff decided by the regulatory commission is too high.
Q: We understand there will also be an audit of power companies, in your mind what could that throw up and are these power companies not audited already?
A: The power companies' accounts also go through their audit, the regular statutory audits that are required. So the government wants to get the Comptroller and Auditor General (CAG) to do one more audit.
Q: Is that legally tenable because ultimately 51 percent is with private unit, it is not exactly a government unit and therefore doesn't fall within the ambit of the CAG or can the CAG nevertheless call for it?
A: I would really not be able to say immediately but since 49 percent is owned by the Delhi government, I don't think you can rule out the role of CAG in there. But one will probably have to look at the rules more carefully to see whether CAG can do this.
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