Differential tariff plan get thumbs down

The Karnataka Energy Regulatory Commission's (KERC) proposal to incorporate a differential tariff regime for fixing power tariffs in the state has been unanimously rejected by all the electricity supply companies (Escom) and Karnataka Power Transmission Corporation Limited (KPTCL). This rejection has also been backed by various state industrial bodies.

KERC had proposed that better performing Escoms might have to reduce tariff and the not-so-well performing Escoms will have to hike tariffs.

At a tariff-hike hearing at the KERC on Monday, all the Escoms said that they are not ready for the differential tariff regime and it will lead to lots of confusion in implementing it and will only delay the tariff hike sought.

They were of the view that this mechanism will affect the dispersal of industries to the rural areas and also the way subsidies are disbursed.

"For example, in Gulbarga there are a lot of IP set installations for which subsidy is given by state government. If differential tariff is implemented in such areas, there has to be drastic increase in tariff for non-subsidised consumers in that region, which citizens cannot bear with and the state might have to increase subsidy," a senior official of KPTCL said.

The state industry bodies also said that differential tariffs should not be introduced immediately but in a phased manner.

Said M R Deshpande, secretary, Federation of Karnataka Chambers of Commerce & Industry (FKCCI): "The differential retail tariff should be introduced in a phased manner over a period of three years after sufficient opportunities are provided to ESCOMs and also consumers are sufficiently educated to anticipate the consequences." Otherwise, the measure will create regional imbalance and asymmetric growth.

The associations were also of the view that transmission and distribution losses should be brought to a meaningful level during the next three years before making any attempt to bring in the differential retail tariff in the state.