Asserting that KERC’s order would benefit mainly big industries, the ESCOMS feel that it is in “contravention” of the Appellate Tribunal for Electricity’s (ATE) order. Last month, the KERC passed an order permitting the ESCOMS to collect energy charges and fixed/demand charges corresponding to consumption for two months as security deposits, where the monthly billing system is followed. In case of installations where there is bi-monthly billing, a three-month despoit is permitted.

The ESCOMS had submitted a plea to allow the collection of three months’ energy charges including fixed/demand charges as security deposits.

According to sources, all the ESCOMS put together now have security deposits amounting to about Rs 2,300 crore.

The reduction of the security deposit period from three to two months means the ESCOMs will lose one third of this amount (more than Rs 730 crore).

“This Rs 2,300 crore is available to us at six per cent rate of interest, whereas  financial institutions normally charge us 12 to 15 per cent interest on loans. The latest order of KERC will deal a severe blow to ESCOMs, which are already tottering with weak finance.

Losing funds

Firstly, they will be losing a major chunk of the funds which are being used for capital works. Secondly, as the ESCOMS are financially weak, they will find it extremely difficult to mobilise loans from financial institutions,” sources say. Moreover, the ESCOMS feel that allowing bank guarantees as security deposits will further drain their revenues.

Returning deposits

“We will have to return most of the deposits because  consumers, especially HT consumers, would prefer to give bank guarantee instead of cash as security deposit,” the source said.

The HT consumers (mainly industries and other commercial establishments) account for nearly 40 per cent of the ESCOMs’ revenue.

But sources in KERC stated that they have passed the order limiting the security deposit equivalent to two months’ minimum deposit, based on the procedure prevalent in  the neighbouring states of Andhra Pradesh, Tamil Nadu, and Kerala.

But the ESCOMS disagree with the view put forth by KERC. Quoting the order passed on January 23, 2007, the ESCOMS say that as per the order, the security amount covering the estimated two months’ power supply bills is not adequate.
“When the ATE has said the deposit has to be more than two months’ power supply bills, how can KERC restrict it to two months only?” sources in ESCOMS ask.