Power tariff hikes in Bengaluru: Bescom making people pay more for its incompetence?

The Bescom has various structural problems which it has no will to improve, and is indiscriminately increasing power costs to put the onus on consumers.

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The Bangalore Political Action Committee (BPAC) have submitted a report to the Bengaluru Electricity Supply Company (Bescom) opposing the electricity tariff hike that was recently proposed in January. The report was submitted during the public consultation held on February 7.

BPAC alleged that the real reason for Bescom increasing the tariff was not even directly connected to household consumers. Though Bescom has claimed that a huge revenue deficit of Rs 5,872 crore was the reason for the tariff hike, BPAC's report says that Bescom is making people pay extra to cover up for it's own incompetency.

“When they are slashing the prices of power in other places like Delhi, where is the need to have a price increase in Bengaluru?” asks Revathy Ashok, CEO of BPAC. Delhi residents have access to free power for the first 100 units, and Arvind Kejriwal, Chief Minister of Delhi, announced in August that the free units would go up to 200 units.

However, Bescom proposed an increase by Rs 1.96 per unit for 2021. This is an increase of 24% from the average cost in 2019 of Rs 7.84. This price of Rs 7.84 per unit is in itself a 15% increase from the approved rate of Rs 6.80 per unit, as given by the Karnataka Electricity Regulatory Commission (KERC).

BPAC’s report looks at comparing performance and productivity in detail to look into reasons for such a huge deficit. They found that the problem was multi-fold.

Power theft and distribution loss

“Bengaluru has the highest transmission and distribution losses among the progressive states, at a loss of 16.42%. Other places like Delhi have a much less transmission and distribution loss, between 8.9 to 8 percent. Why is this? Because there is a large amount of power theft, and the Bescom does not have the will to follow it up. Why should the poor consumers pay huge electricity bills because of the Bescom’s incompetence?” Revathy asks.

The KERC’s approved rate of transmission and distribution losses is set at 15.33%, however, the BPAC report states that Bescom routinely flouts it, with Bengaluru alone witnessing a loss of 16.42% of the total power distributed in 2019. “Bescom does not show interest in reducing these losses, which affects the price,” the report states.

Outstanding dues not collected

They study found that Bescom was not collecting its dues and that the agency has an average outstanding payment of 7.42 months.

“When Bescom does not collect its dues, it incurs huge cash deficits for which they have to borrow and pay interest. They are trying to pass on this interest to the poor consumers, who struggle and pay their bills on time. Where is the justice in this? A large proportion of this pending collection is from government dues and government must bear the interest burden. This cost should not be passed on to consumers,” Revathy Ashok said.

Agricultural consumption is disproportionate

The report shows that there has been a huge increase in the number of water pump sets being used, and also in power consumption by the agricultural sector. According to the regulations, each farmer can have only one pump set. Karnataka has witnessed a drop in the gross irrigated area by eight% between 2016 and 2019. However, the report states that the consumption of power for agricultural activities has increased by 71% in this period.

“Power for agricultural use is always subsidised due to political reasons, we do not object to farmers getting a subsidy. But fact is, farmers are not the true beneficiaries, and they continue to be in distress. Any power benefit to farmers must go as a direct benefit transfer, so there is no potential for leakage. All subsidies should also be borne by the government. Consumers should not and cannot be made to pay for this, through increased power tariffs.” Revathy says.

Industrial users moving away from Bescom

The report states that there has been a 7% decrease in the power units sold for industrial purposes, despite the increase in number of subscribers for high tension units.

“This is because they are moving towards private energy exchanges, which give flexible and low rates of power, and they don’t have to rely on the fixed rates of Bescom. Bescom must reduce the rates for industrial consumers as it helps job creation. With Industrial users moving to private exchanges, consumers will end up paying more,” Revathy says.