Karnataka's small scale units decry tariff hike

The Karnataka Small Scale Industries Association (KASSIA) has objected to revision in power tariff for 2014-15 and demanded that KERC (Karnataka Electricity Regulatory Commission) reject the petition filed by Bescom.

In a public hearing held on Monday, Kassia filed a series of objections arguing that Bescom’s petition for tariff revision is not maintainable since it has been filed beyond the period prescribed — not less than 120 days before the commencement of the financial year.

Kassia argued that the petition for tariff revision should have been filed on or before November 30 last year.

The small scale industry nodal body said that the proposal to hike tariff by 66 paise per unit for all category of consumers, except BJ/KJ and IP sets, to meet the gap of Rs 1,300 crore for fiscal 2015 has been made without any effort to realise the arrears outstanding from water works and streetlights amounting to Rs 2,868.34 crore.

“The proposed hike for all categories is unjustified especially in case of SSIs (LT 5 and HT 2 (a) categories) which are subject to load-shedding, and unscheduled interruptions leading to loss of man hours and production,” Kassia said.

As per the government of India’s 2006 National Tariff Policy, it has been mandated that tariff fixed from 2011 should be in the range of 20 per cent of cost to serve.

Despite a lapse of three years after the policy was laid down, Bescom has not worked out cost-to-serve and its proposed tariff hike may exceed the benchmark of 20 per cent of cost-to-serve.

“Since this will constitute a violation of the national policy, the petition has to be rejected,” Kassia General Secretary A Padmanabha said.

Bescom’s proposal to purchase 862 MU at 576 paise per unit disregards the Commission’s tariff order of 2010 which had put a cap of 496 paise per unit for short-term power purchases.

KERC should reject the purchase of power at such high cost, Kassia said.

“Bescom has been notoriously slow in completing metering of DTCs which should have been completed by December 2010 as per the Commission’s direction.

Progress registered even after a lapse of three years is around 50-60 per cent (only 80,408 metered out of 1,58,662 DTCs).

DTC metering is extremely important for LT line loss calculation, and helps cut down line losses,” Padmanabha said.

He pointed out that LT losses have been mounting since additional HT lines have not been drawn.

‘Tariff revision íllegal’

Calling the tariff revision sought by electricity supply companies (escoms) illegal, the Federation of Karnataka Chamber of Commerce and Industry (FKCCI) has said that the power utilities do not have power purchase agreement (PPA) and any purchase without PPA is considered illegal .

During the KERC hearing, counsel for FKCCI Sridhar Prabhu said there is no justification to the cost fixed without any PPAs and pointed out that there is no PPA either with the Central Generating Stations (CGS) or with Independent Power Producers (IPPs).

"The escoms say that the Central Electricity regulatory Commission (CERC) has determined the tariff, but as per the Act, CERC has no jurisdiction to fix tariff for escoms,"he said.

Pointing out that Bescom gets 20 per cent of its power from CGS and 21 per cent from the IPPs, he said, "For any PPA beyond six months requires approval from KERC, since the approval is not obtained, the licence of the power utilities can be cancelled," he said.

On Bescom's mention of purchasing power under Section 11, Prabhu said that Section 11 is imposed by the government and the same cannot be passed on to the consumers.

Citing Bescom’s mention of 6,025.7 million units losses due to unmetered consumers, FKCCI urged that the loss due to unmetered power consumers cannot be passed on to metered consumers.

The counsel also questioned the basis on which the state government allocates costly power to the escoms.