Escoms to recover full expense on fuel, power purchase

The annual hike in electricity tariff is likely to be overshadowed by the fuel cost adjustment charges in the coming days as electricity distribution companies (escoms) will be allowed to recover the full additional expenditure from consumers.

As per the existing rules, transmission costs, fixed charges, freight and road transportation costs and other cess that make up the additional costs were passed on to the customer during the annual tariff revision. Escoms, which had already paid up for the power, had to wait for more than six months.

The Karnataka Electricity Regulatory Commission (KERC) has now issued a draft notification to amend the Fuel Cost Adjustment Regulations 2013, which earlier restricted the escoms to collect only a part of the costs (‘variable’) incurred in purchasing the electricity.

For example, Bescom spent Rs 218.92 crore for purchasing power between October and December 2021. However, the KERC allowed recovery of only the variable cost of Rs 96.72 crore. The remaining Rs 122.2 crore was carried forward to this annual tariff revision.

“Escoms are not in a position to wait for one year as rising coal prices require us to pay huge amounts of money to purchase power. Recently, the Union government had changed the national tariff policy to give escoms a free hand in recovering the costs incurred. The KERC has issued the draft notification in this regard,” an official in Bescom said.

As per the amended rules likely to come into effect on August 22, escoms do not need KERC clearance to impose additional cost of up to 10 paise per unit.

“If the recovery amount is more than 10 paise/unit, then prior approval of the KERC is needed. The commission will take into account such requests and based on the financial situation, allow escoms to collect the cost,” the official explained.

Escoms are beset with Rs 30,000 crore liabilities and the high cost of coal has added to the troubles over the last one year. The KERC recently allowed escoms to collect an additional 19 to 31 paise per unit to recover the variable cost. With the coal costs expected to remain high in the coming days, officials believe the electricity price may go up further in the coming days.