Government proposes increasing industrial and commercial electricity tariff in Karnataka, and reduce for IP sets

The government has filed a petition before the Karnataka Electricity Regulatory Commission (KERC) to reduce the tariff on LT 4(a) — the irrigation pump set category — and increase the tariff for industrial and commercial consumers to fill the revenue gap of ₹4,620 crore.

The revenue gap occurs at the electricity supply company (escom) level when there is a deficit between the tariff collected and the expenditure, including power purchase cost, that is incurred.

The commission has admitted the review petition. 

In this year’s (FY 2025 – 26) budget, the government of Karnataka had announced a subsidy of ₹16,021 crore for IP sets, and ₹10,101 crore for Gruha Jyothi scheme. However, in the tariff order passed for this year, KERC stated that the subsidy required to provide free power for IP sets is ₹20,095.44 crore.

In the petition, the government has also stated that in addition to the subsidy amount of ₹16,021 crore announced in the budget, the government will release an additional subsidy of ₹2,362.47 crore to mitigate the overall shortfall in revenue.  

Industrialists and experts from the power sector argued that KERC should not have admitted the review petition, as it did not have the necessary criteria.

“A review petition under the Code of Civil Procedure (CPC) is a mechanism for a court to reconsider its own judgement or order. This is typically done when there is a mistake or error apparent on the face of the record, new and important evidence is discovered, or another sufficient reason exists. It is a way to correct errors, and not meant to be a second chance to argue the case on merits,” said M. G. Prabhakar, former advisory member, KERC. 

However, KERC officials said that there are grounds to admit the petition and seek public opinion.

“When the government itself is appealing, we can admit the petition. We have now directed escoms to publish newspaper advertisements and hold public hearings on the matter. We will take a decision based on the recommendations of all stakeholders,” P. Ravikumar, Chairman, KERC told The Hindu. 

Industrialists, who have already been burdened by a plethora of cess, are dreading an increase in tariff, especially since the recent tariff petition is a multi-year tariff petition.  

Shiva Kumar R., former president of Peenya Industries Association (PIA), said, “Industries are already in dire straits. Especially in Bengaluru, the infrastructure is still new, and we face a lot of hardship. The government wants us to increase minimum wage. They have already imposed a tariff of 36 paise per unit for this year to cover the pension and gratuity of escom employees. We are also paying solid waste management (SWM) cess. Instead of burdening us so much, if industries are encouraged, then economic activity and employment generation will increase. Otherwise, how are micro and small-scale industries supposed to operate?”

He added, “We strongly oppose this petition. We will definitely file our objections when a public hearing is called.” 

For FY 2025 – 26, the energy charges for industrial consumers are ₹6.60 per unit, and for commercial consumers, it is ₹5.95 per unit. The energy charges for both these categories were reduced in the tariff order while the charges for the LT 4(a) category went up from ₹5.65 per unit to ₹8.30 per unit.