A Rs. 190-crore deficit can be reduced by increasing electricity rates, says Mescom MD

Mescom’s proposal to increase electricity tariff by 70 paisa per unit met with stiff opposition from consumers at a public hearing organised by the Karnataka Electricity Regulatory Commission (KERC) here on Thursday.

Arguing for a tariff hike, S. Sumanth, Mescom Managing Director, said there was a marked increase in power purchase cost, which takes up to 78 per cent of the company’s expenditure.

The unpopularity of the demand was reflected in the over 2,155 objections received by KERC from Dakshina Kannada, Udupi, Chikmagalur and Shimoga. The public hearing was for consumers from these districts.


Members of the Karnataka Chamber of Commerce and Industry said the figures provided by the company were “incredulous” and showed a problem in cash management. S.S. Kamat, former KCCI president, said there was no sense in the company paying interest on borrowed loans when around Rs. 432.5 crore was still owed to the company by other electricity supply companies (Escoms).

This was backed up by others at the meeting, including Narasimha Nayak from Chikmagalur, who said: “When you can disconnect Bhagyajyothi homes for non-payment, why can’t you take action against industries [including Mysore Paper mills which owes the company Rs. 26 crore] and Escoms for not paying?”

KERC Chairman M.R. Sreenivasa Murthy agreed, and directed Mescom for a speedy reconciliation with other electricity companies to get back the amount.

Making a case for lowering tariffs, Ramakrishna Sharma, member of the Udupi branch of Bharathiya Kisan Sangha, said Mescom can help offset the losses borne by farmers by reducing the tariff.

Pending bills burdening farmers needed to be resolved immediately, said Shrinivas Bhat K. of the Sangha.

He said farmers did not pay old bills because governments had promised to waive them off. Mescom MD said the projected cost for purchasing power for 2013-14 is Rs. 1,687.61 crore for 5,017.68 million units; operations and maintenance would cost the company Rs. 306.43 crore, while interest and finance would be another burden of Rs. 145.65 crore on the company, he told Mr. Murthy.

“There will be a Rs. 190 crore deficit for the company, and this can be reduced through a tariff hike for all consumers except those in Bhagyajyothi and other subsidy-related schemes,” Mr. Sumanth said. Uday Kumar, president, Karnataka Karavali Ice Plant Association, said: “Industries here cannot compete with those in Kerala as electricity is 50 per cent cheaper there. As ice plants use power only seasonally, this should be declared a seasonal industry and given subsidy.” A Mescom official said these factories have maintenance and testing operations during the off-season, thus exceeding the limit imposed. The companies in the “seasonal industry” category can use only 50 per cent per of the power allocated in a year. KREC directed the company to look into this.

Disappearing ink

Satyanarayan Udupa from Udupi district said the ink on Mescom receipts would disappear after a few months, leaving a blank sheet with only an advertisement at the back.

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