Under fire, DERC begins audithttps://indianexpress.com/article/india/india-others/under-fire-derc-begins-audit/

Under fire, DERC begins audit

The audit seeks to verify if the equipment that the distribution companies claim exists physically is actually deployed on the ground.

Reading the straws in the wind, Delhi’s electricity regulator has, over the last week, kicked off an audit exercise aimed at a detailed verification of the physical infrastructure deployed by the three private power distribution companies operating in the capital and squaring it with their capex (capital expenditure) in the last seven years. This is over and above the financial audit being carried out by the Comptroller and Auditor General, a move that was initiated by the AAP during its earlier stint in government.

The Delhi Electricity Regulatory Commission (DERC), which has been facing constant fire from the AAP on counts of “competence” and “impartiality”, is also learnt to have issued orders to all the three discoms seeking a detailed list of their assets that are not in use, alongside reasons for not writing these off.

“The compliance (by the discoms) is awaited,” said a DERC official, adding that the exercise is aimed at cracking down on the practice followed by the distribution firms of replacing assets such as transformers and cables, and then repairing the old ones so that they can be stocked in the store to ensure that the assets are not written off the books.

DERC officials denied that the impending AAP win was a reason for stepping up its crackdown on alleged ‘goldplating’ of assets by the discoms, terming the exercise involving the verification of the discom capex as an “ongoing” one. The audit seeks to verify if the equipment that the distribution companies claim exists physically is actually deployed on the ground.

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Under the regulated tariff regime, discoms earn an assured 16 per cent return on equity investment, something that builds in an incentive for the private utilities to goldplate capital costs. The power firms have rebutted this AAP allegation, claiming that Delhi has the “lowest” tariff among major states.

On the CAG audit of discom accounts ordered during AAP’s previous stint, the three discoms (Tata Power Delhi Distribution Ltd, and Reliance Power subsidiaries BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd) had filed a batch of petitions in September 2014 against a Delhi HC order refusing a stay on CAG audit of their accounts. Sources said the discoms have been readying responses to CAG queries on financial documents, an area where CAG had admitted to facing opposition from the utilities.