JOIN USState owes Escoms 5,499 crore
The customer responsible for the unpaid bill in this case is the State Government, which at present owes almost Rs 5,499 crore for the subsidies.
For the year 2010 alone, the State has to pay the Escoms Rs 3,160 crore for subsidies given for irrigation pumpsets (IP) users and Bhagya Jyothi and Kuteera Jyothi consumers.
Of that sum, the State has committed to pay Rs 2,000 crore, but Rs 1,256 crore remains to be paid. The Karnataka Electricity Regulatory Commission (KERC) has asked the government to pay an additional Rs 417 crore towards subsidies.
Further, the Government had to pay a lot more than expected for the years 2008-09 after the KERC recalculated the costs of the subsidies in November 2009. While the Government was prepared to pay Rs 2,500 crore, it turned out that the dues were nearly double, with an additional Rs 2,400 crore owed. A review petition is now pending with the KERC by the Government to revisit their cost calculation. If the KERC stands by its calculation, then the Government will have to pay a whopping Rs 5,499 crore to the Escoms. And that is merely the backlog.
The rising expenditure for the Escoms have also come in the form of power purchased to tide over the severe energy shortage. While long term energy purchases costs are low, last minute short term purchases are extremely expensive, costing as much as Rs 12 a unit against a little over Rs three for power available from cogen units. It is roughly estimated that Rs 4,000 crore has been spent in the present year for making last-minute purchases.
Green Tariff
The KERC has introduced a Green Tariff for the first time for HT industries and HT commercial consumers at their option. KERC Chairman Srinivas Murthy said companies that wanted to purchase energy from renewable sources would have to pay an extra Re one per unit over the normal tariff rate.
The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) has expressed its disappointment with the hike in power tariffs as prescribed by the KERC.
“Despite our observations based on the CAG reports, the consequences of unacceptable expenditures have not been considered by the KERC. Level of cross subsidy should have brought down, which has not happened,” they opined. FKCCI hoped that the present tariff revision allowed by KERC will make ESCOMs more responsive to public expectation and perform with greater degree of efficiency, particularly in finance management.
Brace for more shocks
The increased average cost per unit in the tariff for 2011 is 45 paise, of which the average hike of 22 paise is the burden that the consumer is being loaded with. The remaining 23 paise is being treated as a Regulatory Asset (deferred revenue) and an amount of Rs 839 crore will be adjusted in the remaining two years. This could mean that the deferred amount will add to the gap in revenue for Escoms in the coming two years.
In simple terms, a tariff hike next year is in the offing.
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