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 2014. KERC is holding hearings on the application at the Mysore
DC's Office at 11 AM on 26-2-13. Mysore Grahakara Parishat is filing the
following objections to the tariff proposal:
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 (domestic AEH)
is as follows:
Present rate Proposed rate % increase
For the first 30 units 2.30 3.00 30
31 to 100 units 3.50 4.20 20
101 to 200 units 4.60 5.30 15
More than 200 units 5.60 6.30 13
For the first 30 units 2.30 3.00 30
31 to 100 units 3.50 4.20 20
101 to 200 units 4.60 5.30 15
More than 200 units 5.60 6.30 13
These figures are identical for all the ESCOMs. The five
electricity supply companies have made it a habit to collude with each
other and propose identical tariff increases. 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
we have vehemently opposed this in the past, but to no avail. The
Commission is again requested to direct them to cease this practice and
determine the actual cost of power supplied.
2. 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. In the table above, the tariff has been increased by 0.70 Rs. for all consumers. This works out to 30% increase for consumers who practice energy conservation and just 13% increase for consumers who waste energy. Such a rate increase defeats the aim of the National Electricity Policy. Since Sec. 61(i) of the EA mandates that the National Electricity Policy must be followed in fixing tariffs, the rate increase also violates the law. Rightly, it should have been the other way round, with a small percentage increase for the lowest slab and a large percentage increase for the highest slab.
3. Sections 61(b), (c), (d) and (e) of the EA stipulate that 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. From the data submitted by CERC, it is clear that the efficiency is going down and the distribution losses have actually increased compared to past years.The efficiency improvement projected by CESC for the next few years is negligible.There might be no need for a tariff hike now if CESC had undertaken a committed drive to improve its operational efficiencies; to bring down the AT&C 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 of CESC is not an inalienable right to get tariff increases, without exhausting all available means to improve operational and commercial efficiency. Unless these efficiency issues are satisfactorily resolved and the necessary commitments given, CESC's application should not be approved.
V.Mahesha, Mysore Grahakara Parishat