Chamundeshwari Electricity Supply Corporation (CESC), which supplies electric power to Mysore has filed an application before the Karnataka Electricity Regulatory Commission (KERC) to increase electricity tariffs for the period 2011-13. KERC is holding a public hearing on CESC's application on 25-11-10 at Mysore. Mysore Grahakara Parishat has filed the following objections:
1. Sec. 61(g) of The Electricity Act, 2003 (EA) intends that the tariff should reflect the actual cost of power. Since all the power supply companies in Karnataka have filed for identical tariff increases, it is obvious that the tariff proposed by them in general, and CESC in particular, does not reflect the actual cost of power. for example, the proposed tariffs (energy charges) for LT 2(a)(i) category is as follows:
Present rate Proposed rate
For the first 30 units 1.85 2.60
31 to 100 units: 2.90 3.65
101 to 200 units 3.90 4.65
201 to 300 units 4.60 5.35
301 to 400 units 4.95 5.70
For greater than 400 units: 5.90 6.65
These figures are identical for CESC, BESCOM, HESCOM, GESCOM and MESCOM. The actual cost of supply of power for all these companies can not be the same to the last decimal place when one takes into account, the different locations, different distances to power sources, different demographics and different costs of living. It is clear that the ESCOMs have not determined the cost of power supply in any scientific manner, but are presenting fictitious numbers. For this reason, the tariff hike proposed by CESC should be rejected. The ESCOMs have been always submitting identical tariffs and the Commission is requested to direct them to cease this practice and determine the actual cost of power supplied.
2. According to Sec. 61(g) of EA, the electric tariff should progressively reduce and eliminate cross-subsidies. The proposal of CESC goes contrary to these guidelines and tends to increase the cross-subsidy. The exclusion of Bhagya Jyothi and Kutira Jyothi schemes and irrigation pump sets (of upto 10 HP) from the tariff hike will increase the cross-subsidy from other users of electricity and thus violates the Act. CESC can not exclude Bhagya Jyothi and Kutira Jyothi schemes and irrigation pump sets from the tariff hike. If the government wants to subsidize these classes of users, it should reimburse CESC the increased cost of the subsidy.
3. Sections 27(1) (d), (e) and (f) of the Karnataka Electricity Reforms Act, 1999 stipulate that in determining the tariffs, the Commission shall be guided by principles of 'economical use of the resources', 'optimum investments', 'interests of the consumers' and 'commercial principles'. It is clear that none of these requirements have been fully met by CESC. The process of tariff revision should not only suitably compensate CESC for any unavoidable increase in the input costs, but it should also seek to eliminate wastage and increase efficiency to adequate levels. There is no need for a tariff hike now if CESC undertakes a committed drive to improve its operational efficiencies; to bring down the aggregate technical and commercial loss to international levels, to ensure accurate metering of all the connected installations, to improve revenue collection efficiency to 100%, to adopt international benchmarking and to adopt best work practices. Increased deficit between its anticipated cost and revenue does not give CESC an indisputable right to get tariff increases, without exhausting all available means to improve operational and commercial efficiency.
4. CESC has been focussing too much on power supply management and not enough on power demand management such as promotion of CFLs and LEDs, solar lighting and solar water heaters through incentives (both in the form of attractive energy bill discounts and subsidy through government in the capital cost), introducing Time-of-Day metering and the corresponding tariff, subsidizing the replacement of old and inefficient IP sets by modern efficient IP sets, discouraging garish night-time advertising, etc. If power demand is properly managed, it is possible that tariff hike will not at all be necessary.
5. Rural areas are suffering heavy power cuts in contrast to urban areas. This discrimination by CESC is against both equity and Sec. 5.1 of the National Energy Policy. The Commission is urged to order an end to such discrimination.
1. Sec. 61(g) of The Electricity Act, 2003 (EA) intends that the tariff should reflect the actual cost of power. Since all the power supply companies in Karnataka have filed for identical tariff increases, it is obvious that the tariff proposed by them in general, and CESC in particular, does not reflect the actual cost of power. for example, the proposed tariffs (energy charges) for LT 2(a)(i) category is as follows:
Present rate Proposed rate
For the first 30 units 1.85 2.60
31 to 100 units: 2.90 3.65
101 to 200 units 3.90 4.65
201 to 300 units 4.60 5.35
301 to 400 units 4.95 5.70
For greater than 400 units: 5.90 6.65
These figures are identical for CESC, BESCOM, HESCOM, GESCOM and MESCOM. The actual cost of supply of power for all these companies can not be the same to the last decimal place when one takes into account, the different locations, different distances to power sources, different demographics and different costs of living. It is clear that the ESCOMs have not determined the cost of power supply in any scientific manner, but are presenting fictitious numbers. For this reason, the tariff hike proposed by CESC should be rejected. The ESCOMs have been always submitting identical tariffs and the Commission is requested to direct them to cease this practice and determine the actual cost of power supplied.
2. According to Sec. 61(g) of EA, the electric tariff should progressively reduce and eliminate cross-subsidies. The proposal of CESC goes contrary to these guidelines and tends to increase the cross-subsidy. The exclusion of Bhagya Jyothi and Kutira Jyothi schemes and irrigation pump sets (of upto 10 HP) from the tariff hike will increase the cross-subsidy from other users of electricity and thus violates the Act. CESC can not exclude Bhagya Jyothi and Kutira Jyothi schemes and irrigation pump sets from the tariff hike. If the government wants to subsidize these classes of users, it should reimburse CESC the increased cost of the subsidy.
3. Sections 27(1) (d), (e) and (f) of the Karnataka Electricity Reforms Act, 1999 stipulate that in determining the tariffs, the Commission shall be guided by principles of 'economical use of the resources', 'optimum investments', 'interests of the consumers' and 'commercial principles'. It is clear that none of these requirements have been fully met by CESC. The process of tariff revision should not only suitably compensate CESC for any unavoidable increase in the input costs, but it should also seek to eliminate wastage and increase efficiency to adequate levels. There is no need for a tariff hike now if CESC undertakes a committed drive to improve its operational efficiencies; to bring down the aggregate technical and commercial loss to international levels, to ensure accurate metering of all the connected installations, to improve revenue collection efficiency to 100%, to adopt international benchmarking and to adopt best work practices. Increased deficit between its anticipated cost and revenue does not give CESC an indisputable right to get tariff increases, without exhausting all available means to improve operational and commercial efficiency.
4. CESC has been focussing too much on power supply management and not enough on power demand management such as promotion of CFLs and LEDs, solar lighting and solar water heaters through incentives (both in the form of attractive energy bill discounts and subsidy through government in the capital cost), introducing Time-of-Day metering and the corresponding tariff, subsidizing the replacement of old and inefficient IP sets by modern efficient IP sets, discouraging garish night-time advertising, etc. If power demand is properly managed, it is possible that tariff hike will not at all be necessary.
5. Rural areas are suffering heavy power cuts in contrast to urban areas. This discrimination by CESC is against both equity and Sec. 5.1 of the National Energy Policy. The Commission is urged to order an end to such discrimination.
V.Mahesha, Working President, Mysore Grahakara Parishat