Bangalore Electricity Supply Company (BESCOM) has proposed a separate tariff for >1 MW open access consumers, as it causes the non-recovery of fixed costs.

BESCOM has requested for an increase in charges for consumers of 1 MW and above with the goal of recovering fixed charges, as consumers try to find the cheapest variable rate available. Instead of eliminating the open access program, BESCOM has tried to recover more revenue from these consumers.

To calculate this tariff, BESCOM considered the existing approved rates for FY17 open access sales as base data to divide the demand and energy charges. Considering the existing approved rates of fixed and variable cost and based on the actual recovery during FY17, BESCOM says it has recovered only 11 percent of the cost through fixed charges with the remaining 89 percent recovered through variable charges.To ensure the recovery of full fixed costs by reducing the energy charge, it is proposing to increase the fixed charges. BESCOM has also proposed to increase the billing demand to 85 percent of the contract demand or the maximum demand recorded, whichever is higher. BESCOM also wants to penalize proportionate consumption consequent to exceeding the contract demand.

Through this proposal, BESCOM is attempting to generate additional revenue from high tension (HT) consumers with contracted demand (CD) of 1 MW and above by encouraging them to consume over and above the average 12 months consumption through a concessional tariff rate. If >1MW consumers are attracted to this scheme, HT sales will go up, which in-turn would help BESCOM achieve its HT sales target approved by the KERC for the year. This is expected to have a positive impact on the cross-subsidy generation, which could then reduce the subsidy burden on state government for the respective year.

BESCOM is proposing having a separate tariff under both the HT and low tension (LT) category with a time of day tariff. Per the prevailing tariff structure, battery charging units are also being billed under a commercial tariff.

BESCOM also noted that the cross-subsidy surcharge calculated by Karnataka Electricity Regulatory Commission (KERC) and recovered from open access consumers is often insufficient to recover the entire loss of a cross subsidy.  Renewable purchase obligation (RPO) targets are also fixed to encourage solar energy. As solar generation has increased significantly since last year, BESCOM has a proposed levy of wheeling and cross subsidy surcharge for renewable energy, including solar energy.