KERC Plans Cross-Subsidy and Surcharge Cuts, Targets EV and Lift Irrigation Tariffs Among Others

The Karnataka Electricity Regulatory Commission (KERC) has issued a draft notification outlining a roadmap to reduce cross-subsidy and cross-subsidy surcharges across the State’s electricity tariff categories.

The move aligns with the Electricity Act, 2003, and Clause 8.3 of the 2016 Tariff Policy, which directs State regulators to progressively bring tariffs within ±20 percent  of the average cost of supply.

KERC highlighted that over the past 24 years, it has successfully reduced cross-subsidies for industrial and commercial consumers, with levels now largely within the prescribed 20 percent threshold. However, the Karnataka High Court, in its December 2024 order directed KERC to formally specify regulations for progressive reduction of cross-subsidies and associated surcharges.

Under the draft regulations, the highest cross-subsidy categories, LT-6c (EV Charging Stations) and HT-3 (Lift Irrigation for private consumers), will be gradually reduced over six years starting 2028-29. EV charging subsidies, currently at -48.83 percent, will drop below -20 percent at a rate of 5 percent per year, while private lift irrigation subsidies, at -78.98 percent, will decrease by 10 percent annually. Other consumer categories will see minor adjustments to maintain the ±20 percent cross-subsidy band.

The methodology and rates for cross-subsidy surcharge will follow the guidelines prescribed in the central Tariff Policy. Stakeholders are invited to submit comments, suggestions, or objections within 30 days of the notification’s publication in the official gazette.

KERC emphasised that these regulations will not limit its authority to issue orders to meet the ends of justice or adjust procedures in special circumstances. The Commission also retains the right to amend or interpret these regulations as required.