Bengaluru: Power utility proposes cut for agriculture, hike for industries

Bengaluru: The Bangalore Electricity Supply Company (Bescom) has petitioned the Karnataka Electricity Regulatory Commission (KERC) to revise the electricity tariffs announced in March 2025. The utility has sought a reduction of 95 paise per unit for agricultural pumpsets while proposing an increase of 10 paise to Re 1 per unit for industrial and commercial consumers.

This is the first time in recent years that Bescom has formally approached the regulator to review an already announced tariff order. The petition comes amid concerns over subsidy allocation and revenue shortfalls.

Background to the tariff revision

In March 2025, KERC revised power tariffs across consumer categories. Agricultural pumpset users under the LT-4(a) category saw charges increase by nearly Rs 1.5 per unit, while tariffs for industries and commercial establishments were cut by 30 paise per unit.

At the revised rates, the state government’s expenditure on agricultural pumpsets is projected to touch Rs 20,640 crore. However, the budget earmarked only Rs 16,021 crore towards this subsidy, leaving a massive gap of over Rs 4,600 crore.

Bescom argued in its petition that the regulator did not fully account for the subsidy provisions in the state budget while finalising the tariff hike for agricultural users.

Bescom’s submission before KERC

Bescom stated that Electricity Supply Companies (ESCOMs) cannot absorb the subsidy shortfall, nor can they recover it from farmers or consumers without additional government support.

“The tariff order as it stands cannot be implemented without risking ESCOM finances,” Bescom’s petition reads. To bridge the gap, the state government has agreed to release an additional Rs 2,362.47 crore subsidy over and above the budgeted allocation. However, even with this support, Bescom projects a deficit.

To offset the shortfall, Bescom has suggested:

  • Raising industrial and commercial tariffs to collect Rs 1,214.12 crore
  • Recovering Rs 1,148.35 crore through miscellaneous sources, including interest on arrears, cross subsidy surcharge, Fuel and Power Purchase Cost Adjustment (FPPCA), and wheeling charges

Opposition from industries

Industrial bodies have strongly opposed the proposal, terming it “unfair” and “burdensome.” The Federation of Karnataka Chambers of Commerce and Industry (FKCCI) said industries are already grappling with rising input costs, and another tariff hike would affect competitiveness.

“The KERC passed the tariff order in March after careful study of submissions made by ESCOMs. It is not right to now seek a revision,” said B P Shashidhar, Chairman (Energy Committee), FKCCI. “Industries are already struggling due to other price hikes. We will raise strong objections to this proposal.”

Implications for consumers and state finances

If accepted, the tariff revision will provide relief to farmers but could raise operating costs for industries and businesses in Karnataka. For the government, the decision has broader fiscal implications, as subsidy commitments for agricultural power already account for one of the largest items of expenditure.

Experts note that while subsidies are politically sensitive, especially in agriculture, repeated tariff adjustments and financial stress on utilities highlight the need for a more sustainable pricing mechanism.

Conclusion

The KERC is expected to review Bescom’s petition in the coming weeks, during which stakeholders including industrial associations will be invited to submit objections. The final decision will likely balance the competing priorities of farmer welfare, industrial competitiveness, and the financial health of electricity supply companies.