Even a 27 paise hike in power tariff is huge!

Published: 01 November, 2011 07:06 IST | Johnlee Abraham |

The Karnataka Electricity Regulatory Commission's (KERC) decision to levy a 27-paise hike in power tariff and the Rs 5 fixed charge/kilowatt/month has come as a shock to industrialists

The Karnataka Electricity Regulatory Commission's (KERC) decision to levy a 27-paise hike in power tariff and the Rs 5 fixed charge/kilowatt/month has come as a shock to industrialists.
They section is miffed about the fact that even though they will be forced to pay the increased rates, there won't be any respite from 'power cuts.'

Green - Per month power tariff before hike
Red - Per month power tariff after hike

Even though the small-scale industries in the state consume only about 4 per cent of power, they contribute around Rs 7,000 crore annually to the exchequer. Now, with the increase in the electricity rates, these industries will have to shell out over 10 per cent more in the monthly bills.

"The increase in electricity charges will severely affect small-scale industries the most, since there will be a considerable reduction in profit margins with this cost escalation," said Prakash Raikar, president, Karnataka Small Scale Industries Association.

With the new tariff regime in place, industries in the state will have to pay almost 10 per cent extra in their monthly bills from next month onwards.

"All our contracts are signed for a year, and at this point we can't make any changes. The industries will have to bear this extra cost. Thereby, the annual growth of industries in the state will be severely affected," added Raikar.

Besides increasing the tariff for energy consumption, the KERC increased the fixed charges by Rs 5 per KW/hour/per month for industries. The commission has claimed that the increase in fixed charges is necessitated by the increases in the expenditure of ESCOMS.

"Even though the ESCOMs claim that the additional revenue will be used for improving the quality of services, till now it has only been otherwise.
Long power cuts, inefficient power supply management and poor customer service is their trademark," said M G Prabhakar, energy expert for Federation of Karnataka Chambers of Commerce and Industry (FKCCI).

While industries will continue to suffer, the hike in domestic and commercial usage of electricity is also being adversely affected. Residential areas will have to shell out 10 per cent more effective from this month, while commercial establishments will be shelling out seven per cent more.

A single house in a residential area, that had been paying Rs 300 per month on an average, will now end up paying Rs 30 more, generating almost Rs 33 lakh in a single month from one area having around 10,000 households.

Meanwhile, a single shop in a packed commercial areas such as MG Road, usually pays Rs 3,000 on an average for a single month's power consumption. After the revised hike, each shop would have to pay Rs 210 more on power consumption, making a gross of over Rs 16 crore from a single commercial area housing 50,000 shops.

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