Power play: Tata runs into hurdles in Karnataka

Bengaluru: Days after seeking permission to enter Karnataka’s electricity distribution sector, Tata Power seems to be facing resistance from multiple stakeholders ranging from employee unions, farmer organisations and sections of the state govt. The latest hurdle emerged on Monday with Karnataka Electricity Consumers Association (KECA) submitting a detailed memorandum of objection before Karnataka Electricity Regulatory Commission (KERC), seeking rejection of Tata Power Company (TPCL) applications for parallel distribution licences in 15 districts across the state.

The fresh development adds to the growing list of challenges confronting Tata Power, which is seeking licences to operate in areas currently served by state-owned electricity supply companies, including Bescom (Bengaluru), Mescom (Mangaluru), Hescom (Hubballi) and Cescom (Chamundeshwari, Mysuru). If approved, the move would mark a significant shift in Karnataka’s power distribution sector, which has traditionally been dominated by the state-owned companies since inception.

In its submission before KERC, KECA argued that permitting a private distributor to operate only in commercially lucrative urban centres would undermine the financial sustainability of state-run utilities. The association contended that revenue generated from industrial, commercial and high-paying urban consumers currently supports cross-subsidy mechanisms that fund free or subsidised electricity supplied to irrigation pump (IP) sets and economically weaker sections such as Kuteera Jyothi and Bhagya Jyothi.

According to KECA, Tata Power’s entry could result in a migration of high-revenue consumers away from Escoms, leaving public utilities burdened with subsidised consumer categories while losing their most profitable customer base. Such a scenario, the association warned, could weaken the financial position of escoms and ultimately affect service delivery.

The consumer body questioned the objective behind creating parallel distribution infrastructure. Citing provisions of the Electricity Act, 2003, KECA office-bearers argued that a new licensee would be required to establish its own network of cables, transformers and distribution assets despite the existence of an extensive public grid. The association termed this an unnecessary duplication of infrastructure that could increase overall system costs without delivering tangible benefits to consumers.

Besides, the association has flagged potential threats related to employment. KECA alleged that increased private participation in electricity distribution often leads to greater dependence on outsourcing and contract labour, potentially affecting job security and service conditions of thousands of employees currently working in Karnataka’s power sector.

The objections by KECA have come at a time when electricity employee unions and several stakeholders have voiced concerns over the latest proposal which they have termed ‘privatisation’. Even though energy experts have expressed Tata Power has projected competition as a means to improve efficiency and consumer choice, opponents argue that electricity distribution is a public service where financial viability and universal access remain closely linked.

KECA has urged KERC to commission an independent socio-economic impact assessment before proceeding further and appealed to the state government to protect Karnataka’s public electricity distribution system.