In sharp words for the State’s Electricity Supply Companies (Escoms), the Karnataka Electricity Regulatory Commission (KERC) asked them to buck up and run like businesses, rather than government entities.
Announcing the new electricity tariffs for the financial year on Monday, KERC member and acting chairman H.M. Manjunatha said: “The Escoms should think of themselves as industries, not as government entities. They are not taking business seriously. If privatisation plans take shape, they will face the music. They need to be serious about business”.
This came amidst questions from reporters on the almost constant and significant annual hikes in tariffs. Defending the average 35 paise per unit hike, the commission said it was “necessitated” to recover a revenue deficit of ₹2,159.48 crore, which includes ₹ 1,700.49 crore deficit of the just concluded financial year.
“The tariff order for FY21 was issued on November 4 due to the COVID-19 pandemic and other reasons. The revised tariff was given effect from April 1 to avoid the burden of tariff increase to the consumers by creating regulatory asset of ₹1,442.70 crore. Due to the pandemic, the sale of energy by Escoms in FY21 has drastically come down by 7228.65 MU, resulting in reduction in revenue by ₹6,182.84 crore than the approved figure. The power purchase cost in FY21 has also increased by 31 paise per unit due to payment of fixed charges without drawing energy from thermal stations,” the commission said, explaining further that this deficit alone accounted for an increase in tariff by 27 paise per unit.
The remaining increase (8 paise per unit) is towards overall increase in the input costs towards power purchase, operation and maintenance, depreciation and borrowing costs, etc for FY23, it said, terming the new hike “inevitable” to “enable Escoms to carry on their business of supplying the electricity, which is the basic need of the society.”
But Mr. Manjunath did not shy away from cracking the whip on Escoms. Revealing that government departments and local bodies owed crores to the companies, he said, “The estimates we had was ₹6,000 crore. As per the report of the Karnataka Administrative Reforms Commission-2, it is ₹8,000 crore. We have told the Chief Minister this morning that action needs to be taken — either cut power supply or levy penalty — to arrange cash flow for Escoms. We are entering into the administrative domain though we are not supposed to,” he said.
Responding to costly power purchases, which are often cited as a factor to justify the hikes sought, he said PPAs (power purchase agreements) are approved based on the situation that particular year. “If the rates are high that year, they will have to pay them. But many PPAs are almost over and now the state has surplus power. So there are not many PPA approvals given,” said Mr. Manjunath.
He added that the petition enabling payment of compensation to consumers in case of power interruptions without intimation is under consideration.
