KERC Proposal for Equitable Tariffs: Fairness in Open Access Power Sourcing

Karnataka electricity regulatory commission (KERC) is working on setting fair charges for consumers who get their power through open access, meaning they buy electricity from sources other than the state electricity supply companies (ESCOMs). This is an important step in making sure everyone pays their fair share for the electricity they use.

Back in 2003, the commission decided that it’s fair for all consumers to pay a certain amount called “demand” or “fixed” charges. These charges help cover the costs of generating, transmitting, and distributing electricity. These charges were set up in a way that 71% of the fixed costs were covered by everyone’s payments, and the remaining 29% was left uncollected.

However, when consumers choose to get their power from sources other than the ESCOMs through open access, they only pay 71% of these fixed costs. This means that the remaining 29% of the fixed costs are left unpaid.

To deal with this issue, the commission has proposed adding an extra charge, called a surcharge, equal to the 29% of the fixed costs. This is to make sure that all the fixed costs are covered, as required by the Electricity Act of 2003. However, some consumers who use open access have objected to paying this extra surcharge. They argue that they already pay the full fixed costs according to their contracts, so they shouldn’t have to pay any extra.

To address these concerns, the commission is suggesting a different approach. They want to set different fixed charges for consumers using open access. These charges would ensure that 100% of the fixed costs are covered, without needing to impose an additional surcharge. This way, everyone using open access to get their power would contribute their fair share towards covering the fixed costs of electricity.

This proposal is not part of the current tariff applications by the ESCOMs, so the commission is inviting feedback from the public, stakeholders, and interested parties. People have until February 11, 2024, to share their views in writing. There will also be a public hearing starting from February 12, 2024, where people can participate and express their opinions on this matter. The commission’s goal is to ensure fairness in electricity tariffs, especially for those using open access. By setting charges that cover all the fixed costs, they aim to create a system where everyone pays their fair share, contributing to a more equitable distribution of electricity costs across the board.