KERC to Begin Prudence Check of KPTCL and Escoms' Capital Expenditures

Bengaluru: The Karnataka Electricity Regulatory Commission (KERC) is set to initiate a comprehensive prudence check of the capital expenditures incurred by the Karnataka Power Transmission Corporation Limited (KPTCL) and all Electricity Supply Companies (Escoms) in the state. This scrutiny will cover projects undertaken during the financial years 2022-23 and 2023-24, with a focus on evaluating their actual impact compared to the objectives outlined at the time of investment.

A senior KERC official explained that the prudence check would ensure that capital expenditures align with the intended goals. “If the expenditures do not meet the objectives, consumers may be unfairly burdened with the costs of redundant investments,” the official said. This exercise will play a crucial role in monitoring the financial health of these power agencies and guiding future budgetary allocations.

The findings from the prudence check will directly influence the budgetary and expenditure approvals for the electricity supply companies. Based on these results, the KERC plans to implement stringent measures, including potential deductions in the expenditure proposed by Escoms during the annual review to curb unnecessary spending.

The KERC has outlined clear guidelines for this process, focusing on works exceeding Rs 5 lakh. For KPTCL, the analysis will examine capital expenditures related to the establishment of substations, construction and augmentation of transmission lines, and construction of terminal bays. For Escoms, the emphasis will be on projects aimed at improving the distribution network, strengthening substations, upgrading SCADA systems, and converting overhead lines to underground cables.

The prudence check is expected to be completed within the next four months, with the goal of having a comprehensive report ready before Escoms submit their tariff revision and financial status reports by January or February.