Inefficiency, unaccountability plague state's Escoms

Inefficiency, unaccountability plague state's Escoms

Whereas this application for a common increase of 51 paise for all categories of consumers across five different companies looks hilarious, it turns out to be a high voltage shock when we view it in the background of recent government notification of highly curtailed supply hours for the next one year.

On one hand the quality of power supply is steeply deteriorating as exemplified by the reduced number of hours of notional supply, the frequent interruptions, and poor quality of power, while on the other hand the ESCOMs have been seeking steep increase in the tariff since many years. An analysis indicates that various applications by ESCOMs for tariff increase since year2000, amounts to a cumulative increase in tariff of more than 60 per cent. In this regard the paying consumers of the state deserve truthful answers to many of the related questions.

The issues such as the ever increasing tariff, poor quality of supply, the lackadaisical manner in which the consumers are being treated, the much better performance in some of the other states, etc are so glaring that FKCCI, an industries and commerce body in Karnataka has filed a petition before KERC, the state regulator, seeking the cancellation of license to the five ESCOMs. The gravity of the situation can be judged by the fact that a responsible state level body like FKCCI would not have taken such a course of action, with far reaching consequences, without making all possible efforts all these years to bring some accountability to the functioning of ESCOMs through the good offices of KERC.

It is a well-known fact that FKCCI has continuously worked with the regulator and with ESCOMs to bring some sort of transparency and objectivity to the supply industry in the state. But the problems in the supply industry have become so acute and so deeply entrenched that only a thorough review of the whole system is needed, as the petition of FKCCI seem to suggest.

Indian Electricity Act, 2003, and Karnataka Electricity Reforms Act, 1999, which govern the electricity industry in Karnataka, emphasise the promotion of competition, efficiency and economy, while insisting on factors like ‘economical use of the resources’, ‘optimum investments’, ‘the interests of the consumers’ and ‘commercial principles’. IE Act, KER Act and the National Electricity Policy have put huge emphasis on providing reliable and quality power of specified standards in an efficient manner and at reasonable rates for protecting the consumer interests and the environment. If one looks at the history of ESCOMs in the state it becomes clear that none of these objectives have been complied with to a large extent.

IE Act, 2003, mandates that no power supply shall be arranged to those installations without accurate metering.  None of the ESCOMs has ensured accurate metering for all installations.

KER Act stipulates that the tariff progressively reflect the cost of supply of electricity at an adequate and improving level of efficiency. This and many other important directives by KERC over the years have not been complied by the ESCOMs.

Elimination of cross subsidy

The spirit of IE Act and KER Act clearly expects that the cross subsidy to different class of consumers should be eliminated early so that the cost of electricity is recovered in a reasonable manner. But the subsidy by the state government and cross subsidy by commercial and industrial consumers is continuing.

Promotion of efficiency and economy of operations seem to have lost the meaning as evident by the huge aggregate technical and commercial (AT&C) losses in the state which is reported to be about 30 per cent against best practice of less of than 10 per cent.

Sound commercial principles demand that the overall efficiency of the ESCOMs is optimum, but the same has a left a lot to be desired, and is amongst the lowest in the world.

Providing reliable and quality power of specified standards in an efficient manner seem to be of not much concern to the ESCOMs as can be noticed by the poor quality and unreliable power supply throughout the states, especially in rural and semi-urban areas.

The stated objective if IE Act to provide power supply at reasonable rates is likely to be a distant goal for ESCOMs. The need for additional funds must have been reduced by improving efficiency of internal work processes.

Protecting the consumer interests and the environment appear to be of very low priority.  The number of complaints with the consumer grievances forum is steeply increasing, and the abuse of nature is unabated in the form additional coal based and dam based power stations being planned to mask the huge inefficiency in the industry.

Despite all these issues of inefficiency, unaccountability and non-compliance with the letter and spirit of IE Act the ESCOMs are still in business probably because of the generosity of the regulator, who year after year has been trying to set right the problems but whose directives are largely being ignored by ESCOMs. The interest of the state will not be served well if the ESCOMs are allowed to continue with this level of inefficiency and unaccountability.  Because of the essential nature of the electricity the all-round development of the state will not occur unless the public starts participating effectively in the affairs of these ESCOMs when KERC holds public hearing on tariff matters or as in the case of FKCCI petition seeking cancellation of license to ESCOMs.