Citing increase in prices of fuel like coal and gas, a power department official said the hike was made by the power distribution companies (discoms) after approval by the Delhi Electricity Regulatory Commission (DERC).
According to details, PPAC is a surcharge to compensate the discoms for variations in the market-driven fuel costs. It is applied as a surcharge on total energy cost and fixed charge component of an electricity bill.
"The PPAC in Delhi has been increased by 4 per cent from June 11, according to the approval of the DERC," said an official source.
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As per Ministry of Power directions on 9 November, 2021, every state regulatory commission (DERC in the case of Delhi) has to place a mechanism for automatic pass through of fuel and power procurement cost in tariff for ensuring the viability of power sector, said a discom official.
Over 25 States and Union Territories have implemented fuel surcharge adjustment formula, he said.
Under the DERC's Electricity Act, PPAC is a requirement. The central regulatory commission, CERC allows central PSU gencos like NTPC, NHPC and trancos, PPAC on a monthly basis. On the other hand, Delhi discoms are allowed PPAC on a quarterly basis, the official added.
"The PPAC is levied to off-set the increase in the fuel prices. In the latest instance, the decision to increase the PPAC is based on the blending of imported coal, increased gas prices and high prices in power exchanges, which had reached to almost ₹20 per unit, before being capped by the CERC to ₹12 per unit," officials said.
The cost of buying power for Delhi discoms has increased by around 300 per cent since 2002, while the retail tariff has risen by around 90 per cent in the corresponding period.
Adding more, the official said, "The discoms distribution licence levies PPAC of 4.5 per cent without going through the regulatory proceedings. In case the actual PPAC exceeds 4.5 per cent, the discoms file application to the DERC for the differential PPAC claim. After approval from the commission, the differential PPAC is charged in subsequent bills."
With PTI inputs.
