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C. Shivkumar

BANGALORE, Dec. 12

POWER consumers in Karnataka can brace themselves for the future shock. The State Government intends recovering the increases in power purchase costs this year from next year's bills.

Among the methods now under consideration include a surcharge or a cess on consumers of both high and low tension. The State Government's Principal Energy Secretary, Mr K.P. Pandey, confirmed that such a proposal was under the active consideration of the Government.

Mr Pandey told Business Line: "The Government has no resources to meet the additional subsidy bill of the Karnataka Power Transmission Corporation Ltd (KPTCL). The only way therefore is to recover the costs from the consumers directly."

The alternative would be to let KPTCL incur losses and wipe out its capital, he added. Therefore the soft option was to recover from the existing pool of paying consumers, he said.

The State Government has still not decided on the quantum and whether such additional levies are to be open or close-ended. The difference between these two methods being, that the levies would automatically lapse when the targeted amounts have been recovered, or could go on indefinitely. These levies have been proposed over and above the 10 per cent power tariff escalation that has been sought from the Electricity Regulatory Commission.

But there are major legal difficulties associated with these additional levies. Incremental levies by KPTCL would have to be cleared by the State Electricity Regulatory Commission. However, if such a charge were brought about directly by the Government, there would be no need for the Regulatory Commission's intervention, sources said here.

One of the major reasons advanced by the State Government for these additional levies is the possibility of an escalation in subsidy bills. The power subsidy bill estimated in the last budget for KPTCL for the current fiscal was Rs 2,339 crore. The actual incurred subsidy is well over Rs 3,000 crore, even assuming a normal availability of 80 million units per day.

The reason for this difference is due to escalation in the weighted average power purchase costs. As per the original estimate, the weighted average cost was estimated to be Rs 1.94 per unit.

This tariff was based on the assumption that availability from the hydel reservoirs would be at least 35 per cent of the supplies at an average tariff close to 43 paise per unit, thermal supplies (thermal supplies includes Raichur thermal, central stations, and cross-border stations) which account for 55 per cent at a tariff of Rs 1.15 per unit and supplies from liquid fuel stations which account for 10 per cent at a tariff of Rs 3.85 per unit.

However, these weightages have undergone a change due to shortfalls in hydel supplies that is currently about 20 per cent. The shortfall were met through additional cross-border purchases, making the existing thermal stations operate at peak efficiency and also making the liquid fuelled stations at full capacity, which has pushed up the cost of power purchase.

The cost estimate is currently upwards of Rs 2.2 a unit. The cost of supply is even higher after netting for transmission and distribution losses, which are estimated at 36 per cent.

This implied that the power utilities were in a position to bill for only about 64 per cent of the actual supplies, which in turn translated into revenue losses and were partly responsible in escalating subsidy bills of the State Government, Mr Pandey said.

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