Karnataka Power Tariff Revision Proposal Could Have Cascading Effect on Citizens
Bengaluru: A proposed revision in electricity tariffs sought by supply companies (Escoms) for commercial and industrial consumers in Karnataka could soon have a significant cascading impact on ordinary citizens across the state. The Karnataka Electricity Regulatory Commission (KERC) on Wednesday reserved its orders on a crucial review petition filed by the Escoms, with a decision anticipated within the next month.
Revenue Shortfall and Proposed Tariff Hikes
The Escoms have cited a substantial revenue shortfall of Rs 4,620 crore, primarily arising from subsidies extended to irrigation pump (IP) sets used by farmers. While the state finance department has agreed to release Rs 2,362 crore to address part of this deficit, the utilities plan to bridge the remaining gap through specific financial measures.
The proposed plan involves mobilising Rs 1,254 crore through targeted tariff hikes on commercial and industrial consumers, along with an additional Rs 1,107 crore from various miscellaneous sources. If approved by the regulatory commission, this tariff revision is expected to directly impact industries, traders, small businesses, and commercial establishments throughout Karnataka.
Potential Indirect Impact on Consumers
This move could indirectly affect consumers through higher prices of goods and services in the coming months, as businesses may pass on increased electricity costs to their customers. During the hearing, Escoms presented arguments supporting cross-subsidisation as an established feature of the power sector, where industrial and commercial users pay higher tariffs to subsidise certain consumer categories such as farmers.
The utilities maintained that revising tariffs is absolutely necessary to ensure the financial stability of power distribution companies and guarantee uninterrupted electricity supply across the state. They emphasised that without these adjustments, the entire power infrastructure could face operational challenges.
Industry Opposition and Regulatory Process
Industry bodies, however, strongly opposed the proposed tariff hike during the proceedings. The Federation of Karnataka Chambers of Commerce & Industry (FKCCI) and the MSME Council of Mysuru argued that the financial burden should be borne entirely by the government rather than being passed on to commercial and industrial consumers.
These organisations expressed concern that additional electricity costs would further strain businesses already facing economic challenges, potentially affecting employment and economic growth in the region. KERC chairperson P Ravi Kumar carefully heard arguments from all sides before reserving orders on the matter.
The final outcome of this regulatory decision will determine whether industries—and eventually consumers—face higher electricity-linked costs in the coming financial year. This development comes at a critical time for Karnataka's economy, with businesses closely monitoring the commission's ruling that could significantly affect operational expenses and consumer pricing across multiple sectors.
