Report of Indian Institute of Public Administration ... - Ministry of Power

Karnataka
company will be known after the annual report for the year 2005-06 is finalised and
audited.
The rationale for forming this new company might have been that Mangalore,
headquarters of MESCO, is at some distance, which would result in lesser customer
support by the top management, as also in view of the growing importance of Mysore,
which is being targeted as an alternate growth centre for the IT industry with a view to
decongest the overstretched infrastructure of Bangalore. However, the actual motive
appeared to be political rather than functional.
TARIFF REFORM
It is worth noting that the Power Sector Policy of the State Government issued on 30
January 2000, identified the need to reform the tariff structure as an important
objective. The policy recognised that the Regulatory Commission would introduce
necessary modifications in the tariff structure, “which will progressively reduce
cross subsidies and ultimately result in their elimination”. In fairness, however, the
policy noted that to the extent the small rural consumers and the rural poor need to be
protected, the cross subsidies may have to continue in the short to medium term. One
would consider that the envisaged tariff reform policy was indeed a bold and highly
desirable aim, which, though yet to fructify, was indicative of the keen resolve and the
direction of the reform initiative. The KERC has already issued three Tariff Orders for
the DISCOMs till now, and is in the process of developing a multi year tariff (MYT)
policy. It has also approved the Open Access system in the State.
The tariff reform policy also aimed at measures to introduce time-of-day (ToD) meters
for select consumer categories, incentives for supporting load management and energy
conservation etc.
INDEPENDENT POWER PRODUCERS POLICY
Another landmark policy statement issued by the Government of Karnataka was the
IPP Policy, released in 2001. Noting that the shortage at that time to meet peak
demand and energy requirements was to the extent of 16 per cent and 8 per cent
respectively, and that the demand and energy requirement by year 2009-10 would
grow to 9,100 MW and 46,000 MU respectively, the policy proposed a substantial
reduction in T&D losses to 14 per cent by the targeted year and a minimum capacity
addition of some 3,500-4,000 MW requiring heavy capital investments. Besides, the
strengthening of the T&D network was expected to cost a huge sum of about Rs
13,500 crore by the same period. It was in consideration of the need for such large
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