Mescom Appeals to KERC for Revenue Deficit Resolution
Mangaluru Electricity Supply Company (Mescom) has formally requested the Karnataka Electricity Regulatory Commission (KERC) to issue an appropriate order to bridge a significant revenue deficit of Rs 83.1 crore. This appeal is based on the company's annual performance review (APR), highlighting financial challenges amid rising electricity consumption.
Regulatory Scrutiny of Proposed Tariff Hike
During a public hearing held on Wednesday, KERC chairman P Ravi Kumar addressed Mescom's proposal for an 11 paise per unit hike as part of true-up costs. Kumar stated, "We will examine how much needs to be passed on," indicating that the commission will carefully assess the necessity and impact of the increase. It is important to note that KERC has already determined electricity tariffs for the fiscal years 2025-26 through 2027-28, setting a broader regulatory context for this decision.
Financial Discrepancies and Increased Demand
Mescom managing director R Jayakumar provided detailed financial data to justify the request. For the 2024-25 fiscal year, KERC approved power purchases worth Rs 3,957.6 crore, but the proposed APR purchase amounted to Rs 4,472.9 crore. On the expenditure side, the approved figure was Rs 5,291.3 crore, whereas Mescom's actual expenditure reached Rs 5,751.2 crore. Furthermore, the annual revenue requirement (ARR) approved by KERC stood at Rs 5,095.8 crore, but the APR proposal recorded Rs 5,913.5 crore, resulting in the Rs 83.1 crore revenue deficit.
Jayakumar attributed these financial pressures to a substantial increase in power demand across various sectors. Key consumption figures include:
- Domestic consumption rose to 1,950.5 million units.
- Commercial consumption increased to 538.5 million units.
- IP sets consumption reached 2,132.1 million units.
- In high-tension (HT) consumption, commercial usage grew to 239.1 million units.
- Consumption by hospitals and educational institutions totaled 163.5 million units.
Stakeholder Perspectives on Cost Recovery
Suryanarayana V, CEO of MSEZ, offered a perspective on managing these costs. He suggested that any upward revision in Mescom's power purchase cost, which is considered an uncontrollable expense, should be fully recovered from all consumers. This could be achieved by appropriately adjusting the differential cost against any revenue surplus. Suryanarayana proposed that the resulting APR revenue surplus or deficit might be refunded or recovered through a per-unit adjustment in the fiscal year 2026–27, providing a potential mechanism for financial balancing.
The situation underscores the ongoing challenges in balancing utility finances with consumer affordability, as regulatory bodies like KERC navigate complex economic and demand dynamics in the electricity sector.
