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Escoms' proposal for tariff hike draws flak from industry

Bangalore, Dec 11, 2012,DHNS

Says it will be detrimental to industrial development of State

The recent proposal by the State’s five electricity supply companies (Escoms) seeking an average tariff hike of 70 paise per unit has been criticised by the industry.

The Escoms had, on Monday, filed petitions before the Karnataka Electricity Regulatory Commission (KERC), seeking the hike for all categories, barring irrigation pumpsets below 10 HP capacity.

If implemented, this will be a shock for the consumers who have had to bear four tariff hikes since November 2009.

The Bangalore Chamber of Industry and Commerce (BCIC) on Tuesday expressed anguish over the hike proposals to the KERC, which is likely to be taken up for review shortly.

M Lakshminarayan, President of BCIC, said: “The industry is already facing severe hardships due to unscheduled powercuts across the State and is struggling to achieve production and growth. The proposed hike will only aggravate the situation and erode profit margins of the industry.” He said this would result in increase in prices leading to higher inflation.

“As per the statements of the Energy Ministry in the recent past, Karnataka is purchasing power at cheaper rates from various independent power producers (Rs four to Rs five per unit), apart from State-owned and hydro/renewable power plants. This should also be reflected in the power costs being charged by Escoms,” he said. The last revision in hike was effected in April this year. The tariff had been hiked by an average of 13 paise a unit.

Sources said the Escoms, in their petitions, had indicated a revenue deficit of about Rs 1,700 crore and sought that they should be allowed to increase the tariff. In April, the Escoms had projected a revenue deficit of Rs 2538.75 crore.

Another Industrialist, Anuj Sharma, said: “The filing of petitions by Escoms has caused concern in the industry. These many frequent tariff revision exercises have never been taken up in such a short time in the past. If this proposal from the Escoms is accepted, Karnataka will have the highest energy charges/base rate among the southern states and will be certainly detrimental to industrial development in the State.”

The BCIC said Escoms should also look at improving efficiency (reducing losses), which can take care of their revenue deficit.

“The Chamber feels that instead of increasing the tariff, the Escoms should improve their finances by ensuring efficient administration, cutting administrative and distribution costs and providing adequate infrastructure for their optimal functioning,” Lakshminarayan said.


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