Tariff shock may just be bigger

Tariff shock may just be bigger

Tariff shock may just be bigger

The power tariffs in the State might witness a steep increase, exceeding even the revision of 66 paise sought by the power companies.

This may be a reality if the Karnataka Electricity Regulatory Commission (KERC) considers the request of the electricity supply companies (Escoms) to pass on to the consumers, the expenditure of over Rs 2,000 crore made by them to purchase power in 2012.

The expenditure had been made at the instance of the then BJP government.

This might also lead to a legal battle between consumers and the power sector.

The tariff revision is likely to cross 80 paise per unit, if the KERC considers the Escoms’ request.

The then government had promised subsidy to the Escoms, for the expenditure made to purchase power.

The present government has refused to provide the promised additional subsidy and has directed the Escoms to approach KERC, so that they can pass on the burden to the consumers.

The government’s refusal to provide the additional subsidy being a recent development had not found a mention in the tariff filings by the Escoms before the KERC.

The Escoms, during the hearing, had updated the Commission about the government’s direction. They had requested the Commission to consider the expenditure, so that it can be passed on to the consumers.

The Bangalore Electricity Supply Company (Bescom), which is deprived of Rs 1,300 crore of subsidy, hopes the Commission will allow it to recover the burden from the consumers.

“We have mentioned the financial expenditure and the government’s reply, during the tariff revision hearing. We hope the KERC will consider it,” said Pankaj Kumar Pandey, Managing Director, Bescom.

When asked whether it will entertain the application filed by the Escoms, seeking to include the subsidy proposed after the tariff filings, a top official at KERC on condition of anonymity said that it had to be considered.

“Any expenditure made by Escoms will have to be considered by the Commission. We have to consider all expenditure and the income, before issuing the tariff order,” he said.

However, the additional revenue sought by the Escoms can lead to legal problems.

“This expenditure was made at the instance of the government. It is related to short-term purchase of power without approval of the KERC. How can they pass it on to the consumers?” questions M G Prabhakar, an expert in the power sector.

Prabhakar said that the subsidy is given by the government and cannot be passed on to the consumer. “The State is empowered to give policy directions to the regulatory commission, with the exception that it is not valid in respect of the subsidy that it is committed to.”

Another expert said that if there is any amendment to the tariff petition, it has to be approved by the KERC and brought to the knowledge of those likely to be affected.

“Even if power companies claim they have mentioned it during the tariff hearing, the consumer has the right to know whether there was an amendment to the tariff revision.”