BESCOM Seeks KERC Approval To Levy ₹1.65 Per Unit Additional Surcharge On Open Access Consumers In Karnataka

The Bangalore Electricity Supply Company (BESCOM) has submitted a petition to the Karnataka Electricity Regulatory Commission (KERC) seeking approval to impose an Additional Surcharge (AS) on all Open Access (OA) power consumers. The petition was filed on August 24, 2025, and proposes to implement the surcharge from April 1, 2026. BESCOM has suggested a rate of ₹1.65 per unit (₹/kWh) for this additional charge.

BESCOM, which supplies electricity across eight districts in Karnataka, has stated that the surcharge is necessary to recover fixed costs arising when consumers choose to purchase power from sources other than BESCOM under Open Access. The company has already tied up significant generation capacity with KERC’s approval based on projected power demand. However, when large industrial or commercial consumers migrate to Open Access, they stop buying electricity from BESCOM, leading to the underutilization of the power already contracted. This results in stranded generation capacity for which BESCOM is still required to pay fixed charges to the generators as per the Power Purchase Agreements (PPAs).

BESCOM emphasized that these fixed charges, also known as capacity charges, must be paid to the generators regardless of the amount of electricity drawn. When Open Access consumers stop using BESCOM’s power, these costs do not disappear but are instead passed on to regular consumers who continue to depend on BESCOM for their electricity needs. The company stated in its petition that the proposed surcharge aims to prevent this financial burden from falling unfairly on such direct consumers and is meant to recover the costs associated with stranded power capacity.

The petition has been submitted under Section 42(4) of the Electricity Act, 2003, which allows state commissions to impose an additional surcharge to compensate distribution licensees for the fixed costs of stranded power. The proposal is also backed by the Tariff Policy of 2016, which specifies that such a surcharge can be levied if it is proven that the licensee’s contracted power has become stranded due to Open Access migration.

To determine the proposed rate of ₹1.65 per unit, BESCOM followed the formula outlined in the KERC’s Open Access Regulations of 2025. The calculation was based on the estimated cost of stranded power for the year, amounting to ₹1,028.29 crore, which was divided by the total Open Access energy in million units (MU). The data used for this computation, including the scheduled and available capacity of thermal stations, Indian Energy Exchange (IEX) transactions, and Open Access consumption details for FY 2024–25, was sourced from the State Load Dispatch Centre (SLDC) and other ESCOMs in the state.

After receiving the petition, the Karnataka Electricity Regulatory Commission issued a public notice on October 9, 2025. The notice invites responses from stakeholders, Open Access consumers, and the general public within BESCOM’s jurisdiction and other distribution companies such as MESCOM, GESCOM, HESCOM, and CESC. They have been given 30 days from the date of the notice to submit objections, suggestions, or written comments to the Secretary of KERC. The commission will conduct a public hearing on the matter, and the date for the hearing will be announced through a separate notification. The final decision on the implementation of the surcharge will depend on KERC’s review of the petition and the feedback received from stakeholders.