Power tariff may not be hiked in Karnataka in next 3 months

Even as the Union Cabinet Committee on Economic Affairs (CCEA) cleared the decks for increasing power tariff across the country by approving a proposal last week to allow the power generators to pass on the cost of expensive imported coal to buyers, consumers in Karnataka can heave a sigh of relief.

The proposed additional burden is expected to be marginal as Karnataka uses a very little quantity of imported coal and even the marginal hike will have to wait for three months.

3-month reprieve

The process of passing on the burden on account of imported coal to Karnataka consumers can be taken up only after three months due to technical reasons as all the five Escoms in the State have already exhausted their one-time chance to seek the passing of the fuel cost adjustment charges to consumers for the coming financial quarter of July to September.

Karnataka has adopted a system of allowing Escoms to directly pass on the fuel cost adjustment charges to consumers from the financial quarter beginning July instead of waiting for the annual tariff revision exercise.

Under this system, the Escoms can pass on the fuel cost adjustment charges only once in a financial quarter. This time, the Escoms had already used this opportunity and made an application before the Karnataka Electricity Regulatory Commission (KERC) in the last week of May seeking to pass on an average burden of 5.88 paise a unit to consumers.

KERC stand

The KERC’s permission had been sought for this as the norms stipulate that such an approval is mandatory if the tariff is proposed to be altered by more than 10 paise and in this case the Escom-wise proposed hike ranged from 0.55 paise to 11.68 paise a unit though the proposed average hike was only 5.88 paise.

However, in its order issued on June 21 after reviewing the applications, validating the data and discussing with Karnataka Power Corporation Ltd officials, the State power regulator has not permitted the Escoms to pass on the fuel cost adjustment charges to consumers for the coming quarter following “inconsistency in the claims of variable charges pertaining to Raichur Thermal Power Station and National Thermal Power Corporation stations.

Deferring the proposed collection of fuel cost adjustment charges for the period of July-September, the State power regulator has directed the Escoms to instead include these components in their applications for annual performance review – the decision on which would have to be taken before the next financial year – for its examination.

Options for Escoms

The fact that the Escoms have exhausted their chance to pass on the fuel cost adjustment charges for the coming quarter has now come in the way of passing on the cost of imported coal though it has been approved by the (CCEA), sources in the power sector pointed out.

Now the Escoms can only file an application before the KERC for passing the imported coal charges only for the third quarter of October to December. The applications can be filed only in the September-end, sources said.

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