EXPLAINED | What could Karnataka gain and lose if Tata Power gets a distribution licence
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
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. What may change 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? Choice and efficiency 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. Financial stress 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. Renewable sources 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. Arguments of those opposed to it 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.
The BriefWire