Industry associations have expressed dismay at the Karnataka Electricity Regulatory Commission’s (KERC) decision to allow a 25-paise per unit (kwhr) hike in power tariffs.
Bangalore Chamber of Industry and Commerce (BCIC) president M. Lakshminarayan termed the increase “untimely” as it has come at a time when industry is facing an economic slowdown.
Pointing out that the increase, which became effective on May 1, is the fifth hike in 30 months, A. Vijayendranath, president of the Karnataka Small Scale Industries Association (KASSIA), said that small and medium enterprises would be hit by the tariff hike.
Industry sources said that the latest hike is particularly worrying because the KERC has allowed electricity supply companies (Escoms) the freedom to hike tariffs as and when fuel prices increase, from July 1.
This will lead to a continuous increase in power tariffs, which would hit the viability of industrial units in the State, Mr. Lakshminarayan said.
He was referring to the fuel cost adjustment mechanism (FCA), which was cleared by the KERC in its previous tariff order, and which has now been notified in the State Gazette.
“Electricity prices in Karnataka are among the highest in the State,” Mr. Lakshminarayan said.
The hike comes after the increase in the duty on electricity was increased from five per cent to six per cent in March, he observed.
Mr. Lakshminarayan said that the increase is “particularly galling” because it comes even as industries undergo significant losses because of unscheduled power cuts across the State.
Both KASSIA and BCIC have called for “increasing efficiencies” in the electricity system, instead of enforcing tariff hikes.
“The only solace for industry and commercial users is that KERC has not acceded to the original petition of power supply companies seeking a tariff increase of 70 paise,” Mr. Lakshminarayan said.
However, the State chapter of the Association of Chambers of Commerce and Industry (ASSOCHAM) termed the hike “minor ”. J. Crasta, Co-Chairman, ASSOCHAM Southern Regional Council, hoped that the hike would improve the financial health of the power utilities in the State. He also welcomed the contentious order enabling Escoms to set tariff in accordance with fuel prices.