Consumer-friendly electricity tariff order has something for all categories

KERC reduces cross subsidy for industrial and commercial consumers in Karnataka, providing significant relief and fostering industrial growth.

After writing to the State government about reducing the burden of cross subsidy on Commercial and Industrial consumers, the Karnataka Electricity Regulatory Commission (KERC) in the tariff order for Financial Year 2024-25 has reduced the extent of cross subsidy to these consumers by reducing energy charges.

The HT – 2 (a) industrial consumers were cross subsidising to the extent of 12.39% as per the previous year’s tariff order, whereas HT – 2(b) commercial consumers were cross subsidising to the extent of 53.04%. The commission has now reduced it to 6.08% and 36.28% while also reducing the energy charges by 50 paise per unit and 125 paise per unit, respectively.

“It has been a fact that over the years the industrial and commercial consumers are bearing the burden of cross subsidies to meet the subsidised cost of power to irrigation pump sets in the State. This is essentially resulting in payment of cross subsidies to the government by these industrial and commercial consumers,” the tariff order says. 

The order also says, “It has been the commission’s endeavour to progressively reduce cross subsidies in terms of the provisions of the Electricity Act, 2003 and the Tariff Policy of 2016, notified by the Government of India. In this order also the commission has attempted to reduce the cross subsidies payable by industrial and commercial consumers, to encourage industry and trade in the State.”

The last time a reduction in electricity tariff was approved by the KERC was in 2008. Back then, a 50 paise per unit reduction was announced. However, following protests by all the electricity supply companies (escom), the order had to be withdrawn. Hence, this year’s tariff order which has provided significant relief to consumers across categories has been welcomed by all.  

“The tariff order issued by KERC marks a significant milestone in fostering industrial growth and providing substantial relief to the distressed industry and trade sector in Karnataka who had already gone through various challenges due to local and global factors beyond their control,” said Ramesh Chandra Lahoti, president, Federation of Karnataka Chambers of Commerce and Industry (FKCCI).

“The reduction in energy charges, especially for industrial and commercial categories, is a welcome move. FKCCI regards this decision by KERC positively, particularly noting the significance of this action after a gap of 15 years,” Mr. Lahoti added.