The tariff petitions filed by Delhi's three private distribution companies could translate into a 16-30 per cent increase in electricity prices from June.

This is, however, subject to the Delhi Electricity Regulatory Commission deciding to make good the Rs 793 crore (Rs 7.93 billion) revenue gap projected by the three companies between July 2002 and March 2004.

At the time of the last tariff revision in 2001-02, retail tariffs went up about 17 per cent. According to Delhi government officials, the revenue gap shown by the three distribution companies is "highly inflated" and the private companies have projected a major increase in the number of domestic consumers in 2003-04.

This was done to show a higher revenue gap in their tariff petitions, they said. For instance, Tata Power's North Delhi Power Ltd has projected a 22 per cent increase in domestic consumers in 2003-04.

The revenue gap of Rs 793 crore, projected by the distribution companies, translates into a tariff hike of 16 per cent for BSES Rajdhani Power, 21 per cent for BSES Yamuna Power, and around 30 per cent for Tata Power's North Delhi Power Ltd.

Since there was no tariff revision in 2002-03, the revenue gap shown by the distribution companies would be loaded on to the tariffs for 2003-04, which would translate into steep tariff hikes, officials said.

For DERC, the options are limited. It can either grant a tariff hike to the distribution companies, or ask them to improve efficiencies or adopt other measures to reduce the revenue gap. The commission is also likely to scrutinise the data provided by the distribution companies.

None of the three private distribution companies have proposed retail tariffs in their petitions because they are committed to keep them constant till 2006-07.

They have spelt out just the revenue gaps and left it to the commission to set the tariffs. In their filings, the companies have also shown an achievement of precisely the same amount of aggregate technical and commercial loss reduction as was committed during the privatisation of the Delhi Vidyut Board.

The regulator faces an even more tricky situation as far as the transmission utility is concerned. The Delhi government had provided for a total subsidy of Rs 3,450 crore (Rs 34.5 billion) to meet the revenue gap of Delhi Transco Ltd over five years.

However, the revenue shortfall between July 2002 and March 2004 is projected to have gone up to Rs 3,607 crore (Rs 36.07 billion), wiping out the entire available subsidy. The transmission utility was expected to use only Rs 2,624 crore (Rs 26.24 billion) during the period.

The large revenue gap is mainly because Delhi Transco buys power at around Rs 2.36 per unit, but sells it to the distribution companies at Rs 1.32-1.52 per unit, based on their ability to pay.