Imposition of pension cess by CESC violates spirit of power sector reforms, says MGP

The Mysore Grahakara Parishat (MGP) has said that the Pension and Gratuity cess being imposed by Chamundeshwari Electricity Supply Corporation (CESC) since May was a violation of the spirit of power sector reforms.

It places an unfair burden on consumers who had no role in agreements between the government and power sector employees.

In a release, Bhamy V. Shenoy, founding president of the MGP, criticised the P&G cess, calling it legal but unethical. He said consumers using more than 200 units or those who opted out of free power have been charged an additional 36 paise a unit as the Pension and Gratuity cess.

“Though it was too late to reverse this charge without a massive public protest which is unlikely, registering dissent could deter future imposition of such levies in other forms in future,” said Mr. Shenoy.

The Karnataka Electricity Reform (KER) Act, 2002, was enacted to separate power generation, transmission, and distribution, with the State government responsible for funding pensions and gratuities. However, in 2022, the BJP government amended the Act, permitting power companies to recover pension contributions through tariffs, said Mr. Shenoy.

Though the Karnataka Electricity Regulatory Commission (KERC) initially rejected this move, citing the Act’s original provisions, the Karnataka High Court upheld the amendment in March 2024, dismissing a challenge by the Federation of Karnataka Chamber of Commerce and Industry, Mr. Shenoy added.

He pointed out that the move, while legally sanctioned, amounts to the government reneging on its commitment. “While the power sector reform took place, the government had agreed to pay its share of pension contribution. Once an agreement is reached, breaking a solemn promise, though legal by amending the law, is unethical and highhanded,” he said.

This precedent undermines the KERC’s autonomy, the very body established to protect consumers from political interference in tariff decisions, according to the MGP.

It also criticised all major political parties for their role in the issue and pointed out that the BJP amended the Act, the Congress government exploited the amendment to offset the cost of its free power scheme, one of its five guarantees.

Underlining the imperatives of safeguarding the independence of the KERC to prevent misuse of tariff mechanism for political ends, Mr. Shenoy warned that future governments might impose similar levies for unrelated causes.

Published - June 15, 2025 07:12 pm IST