×
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Ways to handle it

POWER CUTS IN STATE : To manage consumption, dynamic pricing of electricity could also play an important role in balancing the demand and supply.
Last Updated 18 September 2015, 18:32 IST
Karnataka is suffering from severe shortage of electricity as reflected in regular power cuts. In Bengaluru, hub of IT industry in the country and fast growing metropolitan, Bangalore Electricity Supply Company (BESCOM) had recently announced, officially, two-hour power cuts for industry, which would have significant implications for the industrial and commercial enterprises (since withdrawn). However, unscheduled power cuts in the city and in other parts of Karnataka still continue.

In view of the rain deficit, and given that 31 per cent of installed capacity in Karnataka is hydel energy, there is a chance that electricity generation could face problems in the near future, and therefore such power cuts would continue longer than anticipated. The installed capacity in thermal, wind, solar, and biogas can be augmented but that is a long term project. Also, officially announced power cuts imply that availability of electricity for sale from other states is not available. Hence, in view of supply constraints, some measures have to be undertaken immediately, within Karnataka, to meet the demand.

If India, and Karnataka, has to ensure success of Make in India and avail the once-in-a-life time opportunity that slowdown of China is offering, then manufacturing and especially MSMEs (Micro, Small and Medium Enterprises) will need to play an important role. Therefore, there is a need to prioritise use of scarce electricity. In fact, one of the key reasons in difference of cost of manufacturing between India and competing countries like China is electricity, especially for MSMEs.

The cost of electricity supplied to industry in China, Vietnam, Indonesia, and Myanmar is around half the rate that is generally charged in India. And cash-starved MSMEs cannot afford improvements in energy efficiency. Now, in addition, if power cuts are enforced, industry has to use generators which would result in doubling the cost of electricity, making it all the more difficult to compete with Chinese products.

In the long run, Karnataka is preparing to meet increasing demand for electricity given that income levels are rising, and urbanisation and housing boom is rapidly taking place. While the government is pursuing long term measures to ease the situation and improving capacity utilisation, some illustrative practices, effectively used globally, can help tide the problem, especially in immediate future.

In view of the insufficient installed capacity, prudent management of existing supply needs attention. In this context, high transmission and distribution losses, mainly theft, at nearly 19 per cent in Karnataka, needs to be addressed. It is important to plug this loop-hole by adopting modern technology to identify specific areas where power theft occurs. 

The main consumers of electricity are irrigation pumps accounting for 35 per cent followed by domestic users (21), industry (18), commercial lighting in markets, including shopping malls (13), low intensity industry, presumably MSMEs (6), and public lighting, including street lighting (2 per cent). In general, to manage consumption, given the pattern, efforts can be made to ensure increased efficiency of irrigation pumps. Similarly, subsidised distribution of LED bulbs could help in reduction of electricity consumption by domestic users.

As even practiced in electricity-surplus advanced countries, commercial enterprises and small business units can be made to follow stipulated fixed hours of operations. The Karnataka government can stipulate working hours, and work culture can develop where businesses, shopping complexes and malls, and commercial markets operate preferably during day-light hours thereby conserving use of electricity.

To compensate for the loss of business in the evening hours, shops and business complexes can be permitted to work on Sundays and other holidays, again exclusively during day time. The chambers of commerce and trade associations of businesses can be consulted before implementing these timings in different cities.

Consumption of electricity in public areas and street lighting, though small, should be evaluated, and used as a signalling device for conveying the message to general public. In view of the acute power shortage, bright street lighting on main roads and junctions could be restricted to critical hours, illustratively, between dusk and 11 pm, to meet the requirements of heavy traffic.

Skeletal street lighting

Thereafter, skeletal street lighting could be considered from 11 pm until dawn. This policy could certainly be implementable during the week around full moons, appropriately utilising the moonlight. Incidentally, some advanced countries do not provide street lights in many elite residential areas, and residents take pride in arranging their own sensor-lighting and security, illustratively, like Palo Alto in California.

Pricing is an economic way of assigning priority and ensuring appropriate usage. If a service is not appropriately priced, its demand will be less or more than its supply resulting in shortages or surpluses. The government should consider steep pricing policy on electricity especially when many residents are already affording high cost electricity through private means like diesel operated generators and battery operated inverters.

To manage consumption, dynamic pricing of electricity could also play an important role in balancing the demand and supply. Therefore, elite shopping malls and business complexes, luxury hotels, club houses, and theatres mainly catering to upper strata of society, should be able to pay a steeply higher tariff on their consumption.

As it is, in times of power cuts, these entities incur significantly higher cost in operating generators or alternate sources of energy, implying that there is scope for raising official tariffs for such consumers. The electricity boards could also consider daily price variation and fix rates on hourly basis, dynamically adjusted with higher rates for peak hours. In some countries, peak prices are nearly 15 per cent higher than non-peak prices.

Finally, given the situation, there should be incentives provided for reducing consumption, and implemented by providing adjustments and discounts in the monthly bill. There is a necessity for prioritising and ensuring prudent use of electricity to ensure development, and industrial growth.

(The writer is RBI Chair Professor, IIM-Bangalore)
ADVERTISEMENT
(Published 18 September 2015, 18:05 IST)

Follow us on

ADVERTISEMENT
ADVERTISEMENT