7 months ago
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Power-intensive industries crossed Karnataka person raised interest implicit the continued levy of the Cross Subsidy Surcharge (CSS) and a projected Additional Surcharge connected unfastened entree power, informing that the determination could marque manufacturing much costly and erode the competitiveness of micro, tiny and mean enterprises (MSMEs) arsenic good arsenic export-oriented units successful sectors similar steel, pharmaceuticals, plastics, and engineering.
The Karnataka Electricity Regulatory Commission (KERC) has issued a nationalist announcement pursuing a petition filed by the Bangalore Electricity Supply Company (Bescom) seeking support for levying an further surcharge of ₹1.65 per portion connected unfastened entree consumers for the fiscal twelvemonth 2025–26. The connection argues that the surcharge is indispensable to retrieve fixed costs arising from stranded powerfulness capableness that Escoms proceed to wage for, adjacent erstwhile ample consumers bargain energy from different sources.
Long-term agreements
According to the Bescom’s filing, the institution has tied up important powerfulness capableness done semipermanent powerfulness acquisition agreements approved by the commission. However, arsenic much consumers opt for unfastened entree - sourcing powerfulness straight from generators oregon exchanges - parts of this contracted capableness stay idle, forcing Escoms to wage fixed oregon capableness charges to generators contempt not utilising the power.
“To forestall undue load connected nonstop consumers, determination is simply a request for determining the Additional Surcharge to guarantee betterment of each the components different than the Cross Subsidy,” the Bescom stated successful its submission.
The utility’s calculations, based connected information from the State Load Dispatch Centre and different Escoms, estimation the outgo of stranded powerfulness astatine ₹1,028.29 crore, which translates into a projected ₹1.65 per portion surcharge. The institution has cited the Electricity Act, 2003, and the Tariff Policy, 2016, which permits specified a levy to retrieve costs linked to an work to proviso powerfulness to each consumers.
Industry pushback
Industry associations person argued that continuing some the Cross Subsidy Surcharge and the Additional Surcharge defeats the precise intent of unfastened access, a cardinal betterment nether the Electricity Act meant to promote contention and let consumers to take cheaper oregon cleaner sources of power.
Uma Reddy, president of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), said that imposing oregon continuing the CSS connected unfastened entree powerfulness utilized successful manufacturing straight inflates the outgo of captious concern inputs specified arsenic iron, steel, bulk drugs, forgings, and integrative components.
“Electricity is simply a large outgo operator for respective industries, peculiarly successful robust and alloy accumulation wherever electrical arc and induction furnaces, arsenic good arsenic rolling mills, devour ample amounts of power. A CSS of ₹1.65 per kilowatt-hour tin rise per-tonne alloy accumulation costs by ₹800 to ₹1,200, depending connected process intensity,” she said.
According to authoritative information for 2025, Karnataka has implicit 5.39 lakh Low-Tension (LT-5) concern installations and 16,024 High-Tension (HT-2A) industries, unneurotic accounting for an vigor depletion of astir 13,480 cardinal units. Together, LT and HT industries lend astir ₹12,644 crore successful yearly revenue, oregon 18.4% of the full energy gross of Escoms. Industry bodies said that this shows however captious MSMEs and ample industries are to the State’s powerfulness ecosystem- some arsenic large consumers and arsenic important gross contributors and pass that further surcharges connected unfastened entree could discourage concern powerfulness usage, affecting Escom finances arsenic well.
“When powerfulness costs rise, the effects ripple done the proviso concatenation - from automotive to operation and electronics, hurting exports and forcing MSMEs backmost to unreliable grid supply,” an manufacture typical said.
Industrial clusters successful Belagavi, Tumakuru, Shivamogga, Peenya, and Jigani are among those informing that higher powerfulness costs could trigger closures oregon occupation losses if unfastened entree becomes unviable.
Absence of intelligibly defined regularisation
The Electricity Act, 2003, nether Section 42(3), allows consumers to procure energy from sources different than their section organisation licensee done unfastened access, requiring the licensee to enactment arsenic a communal bearer providing non-discriminatory wheeling of power. Subsection (4) of the aforesaid conception states that specified consumers shall beryllium liable to wage an further surcharge, ‘as whitethorn beryllium specified by the State Commission’, to conscionable the fixed outgo of the organisation licensee arising from its work to supply.
Under the Act, ‘specified’ explicitly means specified by regulations framed by the due commission. However, the KERC has not yet framed specified regulations nether Section 42, contempt a absorption from the High Court of Karnataka. In its bid dated December 20, 2024, the tribunal directed, “The committee shall guarantee that the aforementioned regulations are framed wrong a play of six months from the day of receipt of a transcript of the order.”
With that six-month model present agelong passed, the lack of these regulations has go a cardinal constituent of contention with manufacture groups arguing that successful the lack of intelligibly defined regulatory parameters, the computation and levy of further surcharges hazard inconsistency and deficiency transparency.
