Karnataka Tariff Hike Proposal to Deter Consumers from Availing Open Access

Listen to this article

Power distribution companies (DISCOMs) of Karnataka have proposed revised tariffs for low-tension (LT) and high-tension (HT) consumers, which include grid support charges for captive open access power consumers.

Apart from other open access charges, consumers will now have to pay an additional grid-support charge in the range of ₹1.57 (~$0.019)/kWh to ₹2.85 (~$0.035)/kWh, which many believe will be detrimental to the growth of captive open access power projects in the state.

The grid-support charges proposed by various DISCOMs for captive open access consumers in the state are given below:

 

Other states like Gujarat, Chhattisgarh, Madhya Pradesh, Tamil Nadu, and Odisha have also imposed grid-support charges for FY 2023-24.

Additionally, DISCOMs have also proposed an increase in demand charges, which will put an extra burden on open access consumers.

The DISCOMs have requested the Karnataka Electricity Regulatory Commission (KERC) to increase the demand charges for HT consumers as it will help charge consumers with a reflective proportion of the fixed cost and also retain HT consumers.

Speaking on the proposed hike in tariffs and imposition of grid support charges, an industry source commented, “They have doubled the demand charges along with the imposition of grid support charges, which will act as an impediment to the growth of the open access segment in the state.”

The source added that if tariffs for LT and HT consumers are increased, they can opt for open access but with the proposed hike of the demand charges and the introduction of grid-support charges, the consumers will not opt for open access.

Further, he said that the tariff inclusive of grid support charges is now ₹8 (~$0.098)/kWh for captive consumers, at which rate industrial consumers are getting power from the DISCOMs.

“The imposition of grid-support charges is going to impact captive projects in the state. Also, the consumers are already paying wheeling charges, so there’s no need for grid-support charges,” he said.

Moreover, the tariff revision petition filed with the state regulator has also proposed an increase in open access charges for FY 2023-24.

The cross-subsidy surcharge, additional surcharge, and wheeling charges proposed by the Bangalore Electricity Supply Company (BESCOM) are as under:

BESCOM proposed a cross-subsidy surcharge based on the formula in Tariff Policy 2016. The DISCOM has proposed an increase in cross-subsidy surcharge in the range of 6-13% for FY 2023-24.

The DISCOMs justified the imposition of an additional surcharge on the ground of the recovery of the fixed cost towards the stranded capacity after the consumers opted for open access. For FY 2023-24, DISCOM has proposed an increase of 14% in additional surcharge compared to FY 2022-23.

Further, BESCOM added that it had arrived at the wheeling charges considering the network and supply cost segregation methodology adopted by the Commission in its earlier order. The DISCOM proposed an increase of 32% in wheeling charges for FY 2023-24.

Other DISCOMs have also proposed similar hikes in open access charges.

Karnataka was the top state for open access solar installations in the third quarter of the calendar year 2022. Karnataka remained the top state for open access solar throughout the year, accounting for a third of the installations during the third quarter in India. The rankings were revealed in Mercom India Research’s Mercom India Solar Open Access Market Report Q3 2022.

In August last year, KERC had issued the draft ‘Green Energy Open Access Regulations, 2022.’ Any consumer with a captive power project will have the right to open access under the proposed regulations. Consumers (except captive consumers) who have a sanctioned load of 100 kW and above will be eligible for open access under the proposed regulations.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.