Citing higher power purchase costs and uncertain demand among various reasons, the Bangalore Electricity Supply Company (Bescom) justified its demand for a ₹1.01 hike in tariff for 2019-20 at a stormy public hearing at the Karnataka Electricity Regulatory Commission (KERC) on Monday.
C. Shikha, Managing Director, Bescom, said the power utility was being allotted high-cost thermal power and a lower percentage of low-cost hydel power, in addition to seeing an increase in purchase costs and transmission charges, resulting in a need for a tariff revision.
Bescom has also proposed to increase demand charges for HT/EHT consumers. “The fixed expenditure is 43%. The contribution of fixed charges is only 18% of the average realisation rate. The balance 25% is concealed in the energy charges. As some HT consumers are moving out of Bescom sales, the fixed charges inbuilt in the energy charges are being lost. This unrecovered component will be passed on to the existing consumers during truing up,” said the tariff proposal.
New proposals
Among the new proposals is one to restructure domestic tariffs, which includes having fewer slabs for urban consumers, such as having consumption of 0 to 50 units under one category instead of the earlier 0 to 30 units.
The power utility wants high-end domestic consumers who can ‘afford’ it to take some of the load of the cross-subsidy off HT consumers. The reason cited for the proposal is that HT consumers are leaving the grid ‘due to the burden of cross subsidy’.
The Special Incentive Scheme has been continued, but with some modifications. The base consumption has been fixed for the overall consumption (average of 12 months) instead of the 10 a.m. to 6 p.m. slot, and the ₹1 rebate has been extended for all consumption over and above the base consumption. The Time of Day tariff has been exempted for HT/EHT consumers opting for the scheme.
The tariff proposal also seeks to bring club houses within residential apartment complexes being rented out to outsiders to be brought under the commercial tariff category.
Tariff for IT companies
Ms. Shikha’s presentation also said that IT companies under the IT/BT policy are ‘costing Escoms’, as they were availing other tariff incentives, such as high voltage rebate, prompt payment incentive, etc and getting energy at cheaper rates from IEX and wheeling. Because of this, Bescom has proposed a separate tariff category for them with tariff rates between industrial and commercial.
The power utility has also proposed bringing educational institutions run by private, unaided institutions under commercial tariff. A similar logic has been applied for private hospitals.
“As their services are charged at commercial rates, it is proposed to increase the tariff rates,” read the Bescom proposal.
‘Consumers should not pay for bad management’
Electricity consumers across categories lashed out at the Bescom for seeking a hike in tariff without improving the quality of power supply at a public hearing on tariff revision on Monday.
The Karnataka Electricity Regulatory Commission (KERC) too came in for criticism from sections of consumers, who accused the commission of being ‘kinder to the government and Escoms’ rather than to consumers.
Mohandas Pai, representing the Bangalore Political Action Committee (BPAC), said consumers should not be made to pay for ‘bad management’.
“The government should pay instead,” he said. Raising questions over the figures furnished by Bescom, he alleged that the numbers mentioned for power purchase costs had been ‘boosted to ask for an increase in tariff’.
Terming Bescom a ‘badly run organisation with no focus on consumers’, he argued against the proposed tariff revision for private education institutions and hospitals saying they are doing ‘public good’.
With reference to the proposed tariff revision for IT companies, he said the IT sector is a major avenue for employment and many companies were already moving to Hyderabad due to the bad traffic in Bengaluru. They should be incentivised, he added.
The Karnataka Small Scale Industries Association (KASSIA), in its argument, said an increase in demand charges was ‘unacceptable’ as small scale industries are already ‘reeling under competition’.
“Whether they supply quality or quantity power or not, they will get their money. They have not touched the unit rate for industries. They want to increase fixed charges instead. There is no rationale in this,” said the KASSIA representative.
M.G. Prabhakar from the Federation of Karnataka Chambers of Commerce and Industry said it is ‘shocking’ that industrial consumption is declining in Karnataka. Calling IP (irrigation pump) sets the ‘Trojan horse’ of the power sector, he said it was a major hole in the system. “They consume a huge quantum of energy. Most of them don’t have power capacitors leading to higher consumption of power,” he said.
Mr. Pai also said the subsidy with regard to IP sets had to be recovered from the government, as ordered by the KERC in the last hearing, and not from consumers.
BWSSB unhappy
One public utility’s proposal was thrashed by another during the hearing. The Bangalore Water Supply and Sewerage Board (BWSSB) said the cost of power amounts to 64% of the revenue the BWSSB gets from water supply and sewerage services.
“This year, the only increase sought is for demand charges (for HT consumers) and not energy charges. Demand charge is going to go up from ₹200 per unit to ₹230 per unit. Last year, it was increased from ₹180 to ₹200. This is a huge cost and it will affect the board,” the company’s representative said.
