Three steps to 24X7 power supply in Karnataka

It is a shame that despite having all the resources, technical manpower and managerial abilities, Karnataka has not been able to provide 24X7 uninterrupted power supply. We take pride in claiming that Karnataka is the first state to produce hydro-electricity, we have grandiose plans and assurances by successive ministers on uninterrupted power supply, but it has remained a mirage. Why?

In recent months, when load-shedding became inevitable because of coal shortage, we saw the Centre-state political blame game. Whenever there is a blackout in any part of the state and all excuses are exhausted, there is always the ready excuse of maintenance problems. An even bigger tragedy is that we, the consumers, do not demand uninterrupted quality power supply even in urban areas.

During a recent conference, and later during the winter session of Parliament, Minister for Power and Renewable Energy R K Singh announced several measures to improve India's power scenario. He said all 

the villages had been electrified by the end of 2017, all willing households would get power connections by the end of 2018, and there would be 24X7 power supply to all by March 2019. Once his concept is adopted and becomes law, any electricity supply company (ESCOM) taking recourse to load-shedding will be forced to pay a penalty.

He wants to ensure that cross-subsidisation is no more than 20%, which is already part of the electricity tariff policy. But this is often violated by several state electricity regulatory commissions, including the Karnataka Electricity Regulatory Commission (KERC). This has resulted in some of our industries becoming uncompetitive in the world market. For Make in India mission to succeed, the cost of power should be competitive.

Singh is also promoting the idea of supplying power to consumers on cost-plus basis, with few price slabs, and giving subsidy to deserving consumers through direct benefit transfer (DBT) mechanism. Such DBT-based subsidy can bring about remarkable changes in consumer behaviour. Every consumer will limit power consumption to save the maximum amount of the subsidy amount.

To enforce discipline on ESCOMs, Singh wants to limit the allowable aggregate technical and commercial losses (ATCs) to below 15%. In the case of most ESCOMs in Karnataka, it is already below that limit and will not be an issue. No SERCs should allow cost pass-throughs above 15% while fixing tariffs, ESCOMs must be forced to absorb the costs. This is a progressive step.

In addition, when all consumers are forced to install prepaid/smart meters with minimal human interface, billing and collection efficiency will also improve by an order of magnitude. When prepaid meters were installed in all urban centres in Manipur, its ATCs were reduced by 50%.

In the background of the pathetic power scenario of the last few years, the vision painted by Singh may sound like an unachievable utopia. However, we may be able to learn some lessons from countries of the former Soviet Union, particularly Georgia. Soon after the collapse of the Soviet Union, Georgia faced a huge power crisis for several years. Finally, after it was forced to adopt many of the same reforms that Singh wants for India, Georgia could have 24X7 uninterrupted power supply.

Three steps

Karnataka should proactively take just the following three steps to bring about a revolutionary change in the state's power sector. It has already signed an agreement with the central government and developed an action plan to ensure 24X7 power for all by 2019. But that plan alone is not adequate.

When the five ESCOMS were established in 2002, there was anticipation that these will be commercially-run companies to supply power at the lowest cost. Today, they are acting more like administrative departments of the government, with the usual political interference, with a generalist IAS officer as the head. The government should appoint a consulting company to draw up an action plan to operate them more efficiently on commercial lines.

Being monopolies, they will not be allowed to maximise profit. But they should be managed to operate efficiently with professional management, with their own employees being groomed to run them. They should be expected to earn at least some minimum rate of return on their assets. Today, most of them are close to bankruptcy.

The KERC was created to keep the politics away from price determination and to base pricing on the actual cost DISCOMs incurred to supply residential, agricultural, commercial and industrial consumers. Though it costs less to supply industrial consumers than residential consumers, industries are charged the highest rate. This is in total violation of the basic principle of the Electricity Act, 2003, as Singh, too, argued.

The KERC, though autonomous and independent of the government, is making political decisions on whom to subsidise and by how much. It should demand that DISCOMs reduce their ATCs even below 15%, insist on installing prepaid or smart meters, stop cross-subsidisation, force the government to help the poor and farmers through DBT, and hire world-class experts to study and monitor the power sector.

The government has been promoting rooftop photovoltaic (RFPV) power for some time by giving an attractive feed-in tariff to adopters. Still, penetration of RFPV has remained low even in urban areas. The government should remove any remaining hurdles to its greater adoption and promote it in mission mode. Just claiming to have a progressive solar policy is not enough. In the case of rural areas, the government should promote mini-grids based on solar energy.

Unless the government manages its companies in the power sector in a professional manner, allows KERC to function as per the Electricity Act, 2003, and promotes solar energy in mission mode, supplying power on 24X7 basis will remain a mirage in the state.