Tata Power applies for distribution licence in Karnataka

Bengaluru: After more than ten years, a private company has applied for a distribution licence from the Karnataka Electricity Regulatory Commission (KERC). While the rules allow for operation of private power distribution companies, Karnataka has never had a private power distribution company.  

Entry of a private player could hit the operations of the ESCOMs, given that the cumulative loss of all the five power supply companies in the state is close to Rs 40,000 crore.

“The entry of a private player will definitely increase the expectations among people and the initial interest might draw some of our customers, leading to a reduction in consumer base for us,” a senior Bescom official said. 

For customers, private companies may prove beneficial. “Private companies will definitely offer competitive pricing and will also provide tariff certainty, which is a problem with the state-run ESCOMs, especially for industrialists,” M G Prabhakar, energy expert and former advisory council member, Karnataka Electricity Regulatory Commission (KERC), told DH.

Prabhakar said it will also provide reliable better-quality supply and bring down migration to open access.

However, the benefits of having an additional distribution licensee may not necessarily lead to economic tariffs for all consumers, experts said.

“In Maharashtra, new parallel licensees sought high-revenue areas, and the proposed network rollout plans focused on catering to the industrial and commercial consumers first,” said Ashwini Chitnis, Programme Head, Clean Energy Supply, WRI India.

She added that duplicating the distribution network does not provide any economic benefit to consumers at large.

In Mumbai, owing to unique legal precedents, the duplication of infrastructure was prevented, but that might not be the case anywhere else, she noted.

“If the new licensee has to set up the complete network from scratch, given that the task is capital intensive, the economic benefits for consumers may be less,” she said.

According to sources, the Tata Power Company Limited (TPCL) has applied for a licence to operate at Chikkaballapur, Ramanagara, Kolar, Bengaluru rural, Tumakuru and Chitradurga under Bescom jurisdiction.

Applications have also been filed to cover Shivamogga, Dakshin Kannada and Udupi under Mescom, and Belagavi, Uttar Kannada and Dharwad under the jurisdiction of Hescom. The TPCL also plans to operate in Mysuru, Chamarajanagar and Hassan under the CESC.