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The Hindu
The Hindu
National
K.C. Deepika

Be serious about business, KERC tells Escoms

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.

Other highlights of tariff order
To enable micro and small scale industries to recover from the adverse effects of COVID-19, a rebate of 50 paise per unit has been allowed in the monthly energy consumption for one year
For ice-manufacturing units / cold storage plants used for fisheries situated in the coastal belt of Karnataka within the radius of 5 kms from the sea, demand charges will be on the maximum demand recorded during the month or 85% of the contract demand - whichever is higher - at 50% of the normal demand charges plus energy charges. Additional rebate of ₹1 per unit allowed in the energy charges during the year
Relaxation of evening peak ToD (time of day) tariff for use of power between 6 p.m. and 10 p.m. during the monsoon months (July to November) is continued
To encourage sale of surplus energy during the year, the “Discounted Energy Rate Scheme” has been continued at ₹6 per unit for the HT2(a) (b) and (c) categories for usage of power over and above the base consumption for FY23
Special Incentive Scheme introduced in 2018 has been continued for FY23 for all the HT consumers for usage of energy during 10 a.m. to 6 p.m. by allowing an incentive of Re.1 per unit for consumption over and above their base consumption. Consumption during the night (10 p.m. to 6 a.m.) at an incentive of ₹2 per unit is allowed for all the units consumed. Penal charges of Re. 1 per unit will be levied for energy consumed during the evening peak hours of non-monsoon months
To encourage the use of EVs, the existing tariff for battery charging / swapping stations has been continued without any increase
To promote purchase and use of energy from renewable sources, Green Tariff at 50 paise per unit over and above the applicable tariff for HT industries and HT commercial consumers from Escoms is continued.
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