The Hindu : Karnataka / Bangalore News : Escoms may seek 20 p.c. raise in tariff

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Sunday, Jun 28, 2009
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Karnataka

Karnataka - Bangalore

Escoms may seek 20 p.c. raise in tariff

B.S. Satish Kumar

Cross-subsidy issue has become complicated

Escoms need to increase tariff by 110 paise
Very few categories of users available for revision

BANGALORE: The five electricity supply companies in the State are likely to seek a 20 to 30 per cent increase in power tariff before the Karnataka Electricity Regulatory Commission.

According to sources, the high-level committee which has been constituted to look into the tariff proposal is yet to finalise the exact quantum of increase to be sought. Indications are that the committee may prefer 20 to 30 per cent over the present revision in tariff. In terms of finances, this percentage works out 50 paise to 90 paise a unit.

However, everything depends on the “political stance” of the Government as finally several political considerations — such as whether any steep increase in tariff would pose a tough political problem — would crop up.

The Escoms actually require an across the board increase of about 110 paise per unit to bridge the huge revenue deficit of over Rs. 3,900 crore which was the highest deficit the State has ever witnessed. But the high-level committee shot down such a proposal in its first meeting itself as that would be too exorbitant.

Sources said the Escoms might be allowed to file tariff petitions before the KERC on Monday. The committee is learnt to have decided to exempt the consumer categories of Bhagya Jyothi, Kutir Jyothi and irrigation pump sets from the proposed tariff revision.

In this context, finalising the tariff proposal has become a mind boggling act for the officials working on it as they had been left with only a few consumer categories such as AEH, Industries and Commercial for increasing the tariff. The industries and commercial categories are already paying more than the average cost of power supply in a bid to cross subsidise the other categories. As per the national tariff policy, the cross-subsidy has to be progressively reduced to ensure that no category of consumers pay more or less than 20 per cent of the cost of supply by 2010-11. But already the industries and commercial consumers are paying high cross-subsidy. This has made the job of finalising the tariff proposal even more complex.

As per the Karnataka Electricity Reforms Act, the Escoms can only make a proposal to the KERC seeking a tariff increase. The final decision on whether the tariff revision should be allowed and the quantum of increase to be granted will be decided by the KERC.

As per the norms, the Commission has to decide on the tariff petition within 90 days after consulting consumers and Escoms through public hearings.

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