FAQs – POWER PURCHASE ADJUSTMENT COST
Q.1 What is Power Purchase Cost?
Ans. Distribution Licensees like Tata Power-DDL procure power from sources approved by Delhi
Electricity Regulatory Commission (DERC) and supply power to consumers at retail tariffs
determined by DERC. Most of the power is sourced from NTPC stations and Delhi Genco (IPGCL &
PPCL stations).
Power Purchase Cost accounts for about 80% of the total cost incurred by Distribution Licensees.
Most of these costs are paid by Tata Power DDL to NTPC, Delhi Gencos, Delhi Transco Limited and
Power Grid Corporation of India Limited.
Q.2 What are the factors determining Power Cost & and why does it vary?
Ans. Power Purchase Cost is uncontrollable in nature and is volatile making it difficult to accurately
estimate power purchase costs at the time of annual tariff fixation. It is beyond the control of
Distribution Licensees and depend upon following factors like Price of Fuel (Coal /Gas), Railway/
Road Freight, installation of New transmission lines, weather conditions etc.
Q.3 What is the basis for levy of Power Purchase Adjustment Cost (PPAC) in the bills of
consumers?
Ans. PPAC is levied in the bills of consumers as per DERC regulations. The Distribution Licence
levies PPAC of 4.5% without going through the Regulatory proceedings. In case the actual PPAC
exceeds 4.5%, the Distribution Licensee files an application to DERC for the differential PPAC claim
(Actual PPAC % minus 4.5%) and upon receipt of approval from Commission, the differential PPAC
is charged in subsequent bills.
Q.4 What are the various components of the bill on which PPAC is levied?
Ans. PPAC is applied as a surcharge on Total Energy & Fixed Charges. It excludes Arrears, LPSC,
Electricity Tax etc.
Q.5 What are the details of PPAC adjustments in the bills generated recently?
Ans. Tata Power-DDL had filed application to DERC for differential PPAC and has currently received
the finalised PPAC Rates for Quarter 4 of FY 2018-19 and Quarter 1 of FY 2019-20 (Refer Table).
Based on the same, the differential PPAC amount for these two periods have been/is being levied
in forthcoming bills and is reflected under the head of “Adjustment”.
POWER PURCHASE COST ADJUSTMENT CHARGE DETAILS FOR FY 2018-19 (Q4) & FY 2019-20 (Q1)
Financial Year Q4 (2018-19) Q1 (2019-20)
Applicable Period 17.05.2019 to 16.08.2019 17.08.2019 to 16.11.2019
Provisional Rate 4.50% 4.50%
Revised Rate 8.06% 11.55%
Adjustment in bill 3.56% 7.05%
For further details please visit [Link]
compliances/tariff-related/power-purchase-adjustment-charges