Karnataka Electricity Regulatory Commission (KERC) has taken strong exception to the “steep increase” in the administrative and general (A&G) expenditure of Karnataka Power Transmission Corporation Limited (KPTCL).

Stating that the A&G expenditure is increasing abnormally year on year, KERC has criticised KPTCL for not taking any action to control the expenses.

In the tariff order passed last week, KERC has noted that it had approved Rs 42.05 crore as A&G expenses as proposed by KPTCL for the year 2006-07. But as per the provisional accounts, the expenses have reached Rs 59.51 crores, an increase of  41 per cent over the approved figures. This is excluding the employee cost of Rs 168.81 crores.

For 2006-07, KERC has allowed an increase of 20 per cent in A&G expenses over 2005-06 figure.

The increase in A&G expenditure during the 2005-06 over the previous year was 37.84 per cent.

Rejected
KERC has also rejected KPTCL’s proposal to consider Rs 220.23 crore, which is the interest on belated payment for power purchases, in the tariff.

Quoting it’s own tariff order for the year 2003, KERC has noted that “the mandate for KPTCL and the Electricity Supply Companies (ESCOMs) is to collect their dues fully and to settle their liabilities in time. For any lapse on the part of KPTCL and also ESCOMs in collecting their dues and settling their liabilities, the consumers, especially those who pay their dues promptly, cannot be burdened by passing this amount to the tariff. If such amounts are allowed to be be passed on to the consumers, it would create “perverse incentives” for delaying payments of suppliers’ bills. Allowing such payments would run counter to the specific mandate to the commission for promoting efficiency and economy in the sector. Considering this, KERC concludes that no interest arising out of delayed payment of dues to power suppliers can be allowed to be passed on in the approved ERC of the KPTCL”.
Further KERC has noted that KPTCL being a transmission utility under the provision of the Electricity Act 2003 (June 9, 2005 onwards), it is not allowed to trade in power.

Hence, the question of incurring a huge expenditure of Rs 220.23 crores towards interest on belated power purchase payments for the 2006-07 does not arise.