Chamundeshwari
Electric Supply Corporation (CESC) has proposed a rate hike for 2012 before the Karnataka Electricity Regulatory Commission. It has submitted its reply to MGP's objections to the rate hike. KERC is holding a public hearing at 11 AM on 14-9-11 at the DC's Office in Mysore about the CESC application. MGP will be submitting its rebuttal of CESC replies at the hearing. MGP's objections, CESC replies and MGP's rebuttal of these replies are given below.
Objection
No.1:
KERC approved the present tariff as a multi-year tariff for the years 2011-13. Sec. 61(f) of the Electricity Act, 2003 (EA) mandates multi-year tariffs. There are two reasons for fixing multi-year tariff rather than annual tariff, i) to encourage efficiency of supply companies and ii) to reduce regulatory uncertainty. Fixing the tariff once again when there are two years left on the original period of the multi-year tariff defeats the whole purpose of multi-year tariff and violates the EA. It should not be done.
CESC
Reply:
The present application is supplemental to the MYT order for 2011-13. TheMYT process is continuous and not one time application. There are certain deferred claims on the above MYT order which has to be claimed in the subsequent APR applications. So the present application is in order and there is no violation of the EA.
Rebuttal:
The MYT process is not meant to be continuous. The ESCOMs are supposed to make accurate projections and come before the KERC only once in every 3-4 years. If they can not make accurate projections, hence suffer a loss and ask for tariff revisions every year, there is no point to the MYT system. The lawmakers realized that the ESCOMs should be made efficient and accountable and that is why they have legislated MYT. Unfortunately, the spirit of the law is being violated in Karnataka, since we have filed objections to electricity rate increases before KERC almost every year from 2006 (on 31-7-06, 21-7-07, 9-9-09, 25-11-10 and 25-8-11). This is a travesty of the concept of multi-year tariffs.
Objection
2:
Sec.61(g) of 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. The present rates and the proposed rates are identical for all the ESCOMs. 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.
CESC
Reply:
CESC is filing the present application based on actual accounts.
Rebuttal:
Not only should the application be based on actual accounts, the tariff asked should also be based on the actual accounts. The different ESCOMs must have different Operations and Maintenance costs and different income-expenditure gaps. How then can they all ask for the same tariff hike? The fact that all ESCOMs have always asked for the same tariffs shows that they are acting as a cartel and are trying to illegally fix the price of electricity in Karnataka.
Objection
3:
Sec.5.9.4 of the National Electricity Policy states that a more regulatory approach of setting standards for energy conservation would be followed. The most obvious regulation to promote energy conservation is to have higher tariffs for higher consumption. Increasing the tariff by the same amount irrespective of consumption goes in the opposite direction.
Rebuttal:
Higher tariff for higher consumption is true in the current proposal, but the tariffs for high and low consumption have come closer because of the common increase. If the tariff continues to be increased by the same amount for all consumers, the gap between the rate paid by energy savers and the rate paid by energy guzzlers will become even
less. To see this clearly, let us look at the present rates. The highest rate of Rs. 5 per unit is 238% of the lowest rate of Rs. 2.10 per unit. If the cost per unit is increased by 10 Rs. for all consumers, the lowest tariff would then be 12.10 per unit while the highest would be only Rs. 15.00. So the highest rate will be just 124% higher than the lowest rate. When the gap between the two tariffs keeps going down, there will not be enough incentive to economize and there will not be enough deterrent to wasteful spending. This is a violation of Sec. 5.9.4 of the National Electricity Policy. To be consistent with the NEP, the rate at which the higher slab tariff increases should be much higher than the rate
at which the lower slab tariff increases. In the table above, if the lowest rate Rs. 2.10 is increased to Rs. 2.98, the highest rate Rs. 5 should be increased to at least Rs. 7.10.
Objection
4:
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 Electricity Policy. Electricity Regulatory Commissions of other states have acted to stop such discrimination. Karnataka Human Rights Commission has written to the state government on this issue.
The Commission is urged to order an end to such discrimination.
CESC
Reply:
CESC is arranging 12 hours of single phase supply to rural areas. The power supply schedule is subject to variation depending on availability. CESC is not discriminating among consumers in arranging power supply.
Rebuttal:
CESC may be arranging for 12 hour supply in rural areas. Is it not giving much longer continuous supply to cities? Is this not discrimination?
V.Mahesha, Mysore Grahakara Parishat