From internet providers to telecom services, people in Karnataka can choose their service providers and switch whenever the service does not work for them. Electricity, however, has never been part of this choice-based system.
Electricity supply in Karnataka is a system run by Escoms, where each area is assigned a fixed distribution company based on geography, with no option to switch even if the service is unsatisfactory.
In what could break this structure, Tata Power Company Limited (TPCL) recently approached the Karnataka Electricity Regulatory Commission (KERC), seeking a power distribution licence for areas currently served by Bangalore Electricity Supply Company (Bescom), Chamundeshwari Electricity Supply Corporation (CESC), and Escoms in Hubballi (Hescom), Mangaluru (Mescom), and Kalaburagi (Gescom).
Within Bescom limits alone, Tata Power Company stated that it plans to serve over 1.86 lakh consumers within three years of obtaining the licence.
The proposal has triggered sharp and expected opposition from multiple unions statewide, who have warned of fierce agitations and even court action, if the proposal moves ahead.
The proposal has raised a basic question — should electricity remain a single-provider system, or should more than one company be allowed to supply power in the same area?
Independent energy experts and supporters of the move say the biggest change would be choice. If more than one distributor operates in the same area under a parallel licencing model, consumers would no longer be locked into one company. Different companies would compete to supply power and provide consumer services, although questions remain about how infrastructure would be shared, duplicated or developed if a parallel distribution system is introduced. Poor service, they argue, would directly risk losing consumers.
They also argue that competition could improve efficiency. Karnataka’s Escoms continue to report high losses from leakages, theft, and delay in recovery. These inefficiencies eventually feed into tariff pressure or require government support. If competition forces better performance, supporters say overall system costs could come down over time.
The data on the financial condition of Karnataka’s power distribution companies paints a grim picture.
The accumulated losses of the State’s Escoms have risen from around ₹17,559 crore in 2022-23 to nearly ₹34,980 crore in 2024-25, while borrowings have increased from about ₹32,211 crore to almost ₹47,993 crore during the same period. Experts argue that these figures reflect a system under increasing financial stress, and that consumers ultimately bear the cost through tariff revisions, government support, additional borrowing or delayed investments.
Supporters also argue that the economics of the power sector have changed significantly over the years, pointing to changes in the power market itself.
Electricity from newer renewable sources such as solar is today available at around ₹2.50 to ₹3 per unit in many cases, while some older power purchase agreements continue at rates of around ₹8 per unit. According to supporters of competition, companies with stronger purchasing power and greater financial flexibility can move faster to secure cheaper power, invest in grid upgrades, smart meters and renewable energy integration, and improve overall efficiency.
Private distributors survive only if electricity consumption is accurately measured, bills are raised properly and dues are collected on time. Better metering, tighter billing systems and faster recovery of payments naturally create pressure to reduce losses and improve service quality.
But opponents argue electricity cannot be treated like telecom or internet services.
They say Escoms do not function only as commercial utilities but also as ‘welfare-linked’ distributors. Under a parallel system, private companies like Tata Power would operate alongside existing Escoms, potentially creating a split where private players focus on urban and high-paying consumers, while state utilities are left with farmers, low-income households, and subsidised users.
This concern, as per unions, stems from the sheer scale of Karnataka’s subsidy system. Agricultural pump sets alone account for around 24,000 million units of electricity consumption, nearly 32% of the State’s total usage. Around 35 lakh consumers depend on subsidised or free electricity for irrigation. The subsidy burden towards agricultural supply is estimated at about ₹20,640 crore, apart from more than ₹10,100 crore spent under Gruha Jyothi.
That, they say, is where the concern begins.
Agricultural power supply is one of the biggest issues raised. Farmers’ unions, including groups from Dharwad and organisations such as the Karnataka Rajya Raitha Sangha (KRRS), argue that farmers depend heavily on subsidised or free electricity for irrigation pump sets, and fear that multiple distributors could make it harder to ensure uniform supply and consistent subsidy delivery.
Welfare schemes such as Bhagya Jyothi and Kuteera Jyothi, which provide free or highly subsidised electricity to eligible households, are also seen as vulnerable. These benefits currently operate through the Escom system, and opponents argue that ensuring uniform implementation across multiple distribution companies could become complicated.
The government’s promise of up to 200 units of free domestic electricity is also being flagged. Critics say that in a system with private players, cost pressures could gradually affect how such subsidies are structured or sustained, especially if financial responsibilities are unevenly distributed between public and private utilities.
Associations like Federation of Karnataka Electricity Board Employees Union and Associations also fear that private distributors may naturally gravitate towards urban households, commercial establishments, and consumers with predictable payment records, while Escoms continue carrying a larger share of subsidised consumers and welfare obligations. If that happens, they argue, the financial burden on public utilities could become even heavier.
Supporters reject this characterisation and argue that efficiency should not be mistaken for cherry-picking consumers. They contend that any distributor, whether public or private, can be required by the regulator to comply with subsidy mechanisms, consumer protection norms and public service obligations.
Beyond subsidies, critics have also raised concerns about the financial impact on Escoms themselves.
Employee unions have argued that proportionate security deposits collected from consumers would have to move with those consumers if they switch distributors. Since security deposits constitute a significant source of working capital for Escoms, they contend that large-scale migration could worsen liquidity pressures. Karnataka’s Escoms currently hold over ₹11,371 crore in consumer security deposits, including about ₹6,668 crore with Bescom alone. They argue that any transfer of these deposits to a new distributor could affect the working capital position of the utilities
There are also practical questions about how a parallel distribution system would function. Regulatory discussions around the proposal indicate that any new operator would be expected to establish independent infrastructure rather than depend entirely on networks built by the Escoms. Critics argue that this could lead to duplication of assets and operational challenges, while supporters say genuine competition would require fresh investment rather than reliance on existing public infrastructure.
Tata Power’s existing distribution operations in Mumbai, New Delhi, Ajmer, and parts of Odisha claim comparatively lower base tariffs and higher operational efficiency. TPCL’s distribution businesses reportedly operate with aggregate technical and commercial losses below 6%, nearly 50% lower than Bescom alone, which continue to report around 12% losses.
Published - June 22, 2026 12:14 pm IST
Source: The Hindu - India News
