In an unprecedented move, the Karnataka Electricity Regulatory Commission (KERC) has shocked the Karnataka government. The fuel and power purchase adjustment cost has been raised significantly, ranging from a minimum of 33 paise to a maximum of 51 paise per unit.
This revision will result in an additional burden of approximately Rs. 500 crores per annum when calculated for the approved 14,090 million units of electricity allocated for total household consumption.
The impact of this increase will inevitably fall on the government, which had earlier promised to provide free electricity for up to 200 units per month.
The annual sanctioned electricity for domestic consumption stands at 14,089 million units, equivalent to 1,174 million units monthly. When considering the revision of 51 paise per unit by the Bangalore Electricity Supply Company (BESCOM), the burden amounts to Rs. 500 crores. Furthermore, an additional tax of Rs. 45 crore is estimated to be incurred.
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Given that the government’s free electricity scheme covers around 90% of household users, it is projected that the government will have to bear almost the entire burden.
What makes this development even more remarkable is that it marks a record-breaking increase in electricity rates within a short period. Just 20 days after KERC’s previous order on May 12, which raised rates by an average of 70 paise per unit retroactively from April 1, the Commission has now issued another revision, raising rates from a minimum of 33 paise to a maximum of 51 paise for the months of July-September and October-December.