The Karnataka Electricity Regulatory Commission (KERC) announced a hike of an average 8% in tariff for 2017-18 on Tuesday, against the 25% increase the Electricity Supply Companies (Escoms) had sought.
The average tariff increase is now 48 paise per unit, ranging from 15 paise to 50 paise per unit, for all categories. The hike the Escoms had asked for was ₹1.48 per unit.
The new tariffs, though announced late, will be applicable from April 1. Last year, the KERC had hiked tariffs by an average 9%, which amounted to a 48 paise average hike. The increase sought was ₹1.02 per unit.
Curbing demand
For the first time, the KERC announced differential tariffs for consumers catered to by the Bangalore Electricity Supply Company (Bescom). The commission accepted the power utility’s proposal of introducing different tariff hikes for different slabs, submitted in an amended petition. It was the submission of this petition that was cited as the reason for the delay in announcement of tariff revision.
When domestic users consume less, the hike is also lower. However, it is the opposite for HT (high tension) consumers.
To encourage consumption by HT consumers under the industrial and commercial categories, the tariff increase for consumption in the second slab (beyond one lakh units) is 50% lower than the increase in the first slab (20 paise in second slab, 40 paise in first slab). The commission defended this move saying many HT consumers had started purchasing power from open access, leading to losses for the Escoms.
Announcing the new rates, KERC chairman M.K. Shankarlinge Gowda said, “The hike is not for this year, this is to cover last year’s deficit. After the breakdown of the Sharavathi Hydro Power Station last year, low cost hydro electric power was not available. So the Escoms went for thermal power. The deficit because of this was ₹ 2,296 crore for 2016-17, which accounts for 42 paise per unit.”
Higher purchase costs
The other justifications given were the increase in power purchase cost for 2017-18 mainly due to increase in fuel cost of thermal power plants (about six paise), and fuel adjustment cost (FAC) coming to ₹280 crore recoverable during April-June at an average increase of 20 paise per unit.
To reduce consumers’ burden, KERC allowed for the FAC to be collected at an average increase of five paise per unit, with which the hike would add up to 53 paise per unit.
