Commercial and industrial users are likely to bear the burden; energy experts question legality, and industry groups plan objections as public consultation begins
Bengaluru: In what could spark backlash from businesses and consumers alike, the Karnataka government is reportedly considering an electricity tariff hike for commercial and industrial users to address a massive ₹4,620 crore revenue deficit faced by the state’s Electricity Supply Companies (ESCOMs).
The Electricity Supply Corporation Limited has approached the Karnataka Electricity Regulatory Commission (KERC) with a proposal to amend existing tariffs and impose higher charges on certain consumer categories. The move aims to recover subsidies granted to LT-4(A) category consumers, especially Irrigation Pump Set (IP Set) users under the Griha Jyoti Yojana.
“This is a significant policy deviation. The government is struggling to clear outstanding subsidy payments, forcing ESCOMs to explore tariff hikes,” said a senior official from the Energy Department, requesting anonymity.
The ESCOMs filed their initial appeal with KERC on March 23, 2025, and the hearing took place on July 8. Following this, the KERC has allowed ESCOMs to seek public comments within 30 days and submit findings via an affidavit.
Typically, tariff revisions are made periodically to factor in Fuel Adjustment Charges (FACs), but this latest move deviates from standard practice. Officials say this is the first time such a substantial mid-year tariff amendment has been proposed to bridge a subsidy gap.
"The law does not permit such tariff amendments. As per Section 63, Sub-section 4 of the Karnataka Electricity Act 2003, no tariff can be revised more than once in a financial year."
said M.G. Prabhakar, noted energy policy expert.
The approved sale of electricity to IP Sets for the financial year 2025–26 is estimated at 24,868.10 million units. The government bears the cost of supplying power to these consumers at a subsidised rate of ₹8.30 per unit. However, with growing agricultural demand and subsidy allocations, ESCOMs are struggling to stay afloat, prompting them to target commercial and industrial sectors for revenue recovery.
“The subsidy load is unsustainable for ESCOMs. If not addressed, the pressure may eventually extend to even domestic consumers, including those under the Griha Jyoti scheme.”
said a senior department official.
Several industrial associations have expressed deep concern and confirmed that they will submit formal objections to both KERC and ESCOMs during the public consultation period.
“At a time when industries are already grappling with rising input costs, this tariff proposal is unjustified and illegal. We will challenge it legally and administratively.”
said a representative from a Bengaluru-based industrial lobby.
With public consultations now open, KERC will be reviewing stakeholder feedback over the next month. A final decision is expected later this year.
Filed By: News Flash Bureau
Correspondent: Vishal Mayur
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