KERC in for rude 'shock' over fixing of price cap

Consumer Care Society opposes the move saying it will lead to monopoly

 KERC which is trying to ease the consumers' burden by fixing a price cap for power procurement was snubbed and embarrassed by consumers themselves, who preferred the competitive bidding. But the power utilities which were expected to oppose, were found supportive.

The power crisis has forced the power utilities to procure power at exorbitant rates to meet the short term requirement. Considering the possibility that the burden would be passed on to the consumers, the KERC had proposed a uniform cap of five rupees per unit for non-peak power and rupees six for peak hour power. The Commission had called for a hearing after much exercise for months.

Citing section 23, Section 60 and Section 61 of the Electricity Act 2003, which empowers the Commission to fix the price cap, KERC had called for the hearing on July 29, 2009. A letter was dispatched to all the consumers and the Electricity Supply Companies (Escoms) on 28, April, 2009.

Interestingly, the hearing turned out to be a fiasco as not many people turned up for the hearing except the Consumer Care Society (CCS). The Society, instead of supporting the view, opposed it outrightly. 

On the price cap being made applicable, the CCS had stated that it would be ridiculous to impose a price cap on power exchange transactions without first investigating the reasons for higher prices and flaws in market mechanism.

But Escoms batted for the price cap, saying “The price cap should be based on tariff impact on retail supply and impact should not exceed 10 percent.”

However, the counsel for Hukkeri Electricity Supply Company Sridhar Prabhu said that cap should be in absolute and definite term (money) instead of fixing percentage. He said that the consumers will be benefited at large by going for the cap.

He said that in the deficit market, bidding will only increase the procurement prices, which leads to cartelisation (monopoly). The view was shared by KERC too.

Chairman K P Pandey, who was surprised by the objections of the CCS said “ We expected an opposition from the Escoms, but definitely not from you. You have not studied papers and this is not a well deliberated discussion.” The matter has been reserved for orders.