Another electricity tariff hike on the horizon?

Team Udayavani, Nov 8, 2024, 10:34 AM IST

Bengaluru: Despite plentiful rainfall and full reservoirs across Karnataka, an impending increase in electricity tariffs seems unavoidable. Karnataka’s electricity supply companies, including BESCOM, have initiated preparations for a tariff hike proposal, which they plan to submit to the Karnataka Electricity Regulatory Commission (KERC) by the end of this month.

The abundant water levels in major hydroelectric reservoirs such as Linganamakki, Supa, and Mani ensure that Karnataka can continue hydropower generation until next monsoon season without any interruptions. However, rising demand and operational costs indicate a potential tariff hike for consumers. Hydropower, which costs an average of Rs 2.05 per unit to generate, remains one of the cheapest sources.

Yet, sources within the Energy Department suggest that an additional increase may be needed, as high summer demand will likely necessitate supplemental power purchases, which will be passed on to consumers in the form of raised rates.

Reflecting on the demand peaks experienced last summer, officials are factoring in a 6-10% annual increase in electricity demand driven by industrial expansion, agricultural needs, and groundwater extraction. The combined state and private production capacity will likely not suffice, compelling the government to arrange power procurement in advance to mitigate costs. Prices tend to spike if purchases are made during periods of high demand, making early contracts essential to secure a favorable rate.

While hydroelectric plants are cost-effective and help reduce peak-hour loads, Karnataka still relies heavily on thermal power plants, which generate electricity at a cost of approximately Rs 7.88 per unit. With coal sourced from other states, transmission and other logistical costs further increase the unit price. Additionally, given the central government’s shift away from supporting coal-based power, Karnataka’s dependency on imported power, which costs Rs 5.03 per unit on average, will further influence the tariff hike.

Senior officials from BESCOM noted that the exact percentage of increase per unit is yet to be determined, but emphasized that preparations for upcoming seasonal demand are already underway. The Energy Department has also cautioned that any delay in procurement could lead to escalated costs, ultimately affecting consumers across Karnataka.