CESC Seeks KERC Nod to Bridge Revenue Deficit

Why It Matters

The deficit approval will determine whether CESC can maintain service quality without immediate tariff hikes, influencing Karnataka's power pricing and fiscal stability. It also signals how regulators balance financial health of utilities with consumer protection.

Key Takeaways

• CESC requests KERC approval to cover ₹528.1 crore deficit
• Revenue fell 5.8% despite 0.2% consumption increase
• Finance costs rose ₹214.8 crore, widening loss
• Distribution losses dropped to 8.8%, showing efficiency
• No tariff hike discussed; review shifted to three‑year cycle

Pulse Analysis

India’s power distribution sector is navigating a tightrope between rising procurement costs and regulatory pressure to keep tariffs affordable. Utilities like CESC are increasingly exposed to volatile wholesale prices, which, when coupled with higher financing charges, can erode margins even as consumption growth stalls. The Karnataka Electricity Regulatory Commission’s shift to a three‑year tariff review cycle adds another layer of complexity, forcing distributors to rely on internal efficiencies and supplemental revenue measures to close gaps.

CESC’s recent performance review underscores this balancing act. While the corporation managed to trim distribution losses to 8.8% and saved ₹200 crore through stricter revenue collection, its finance costs surged by over ₹214 crore, pushing the net deficit to ₹528.1 crore. These figures illustrate that operational improvements alone may not offset macro‑economic headwinds, prompting the utility to seek regulatory relief rather than immediate tariff hikes. The upcoming separate proposal for commercial and industrial consumers will test KERC’s willingness to adjust rates in line with cost recovery needs.

The broader market implications are significant. Approval of CESC’s deficit bridge could set a precedent for other state utilities facing similar financial stress, potentially influencing investor sentiment and credit ratings across the region. Conversely, a denial may accelerate calls for tariff reforms or spur further efficiency drives. Stakeholders, from policymakers to corporate power users, will watch KERC’s decision closely, as it will shape the cost‑recovery framework and long‑term sustainability of Karnataka’s electricity supply chain.

CESC seeks KERC nod to bridge revenue deficit

CESC MD KM Munigopala Raju outlined CESC’s performance and financial position while requesting permission to recover the deficit · TNN · Published On: Feb 17, 2026 at 02:02 PM IST

Chamundeshwari Electricity Supply Corporation (CESC) submitted a proposal to Karnataka Electricity Regulatory Commission (KERC), seeking approval to bridge a net revenue deficit of ₹528.1 crore for the 2024‑25 financial year. The utility cited increased power procurement costs and expenditure incurred in ensuring quality supply to consumers as key reasons for the shortfall.

The proposal was presented during a public hearing on the Annual Performance Review (APR) for 2024‑25, held at the ZP Hall under the chairmanship of KERC chairman P Ravikumar.

Clarifying the purpose of the meeting, the KERC chairman stated that the hearing was confined to reviewing performance and was not related to any tariff hike. He noted that electricity tariffs, which were earlier revised annually, are now reviewed once every three years. He added that a separate proposal seeking a tariff increase for commercial and industrial consumers for 2026‑27 would be discussed on Feb 25.

According to CESC, against the approved 8,428.8 million units (MU), actual consumption stood at 8,447.4 MU, a marginal rise of 0.2 %. However, revenue collection fell short, with ₹7,173.3 crore realised against the projected ₹7,591.2 crore, a gap of 5.8 %. Rising interest and finance costs, which increased from ₹424.1 crore to ₹638.9 crore, also contributed to the deficit.

Distribution losses were reduced from 9.4 % to 8.8 %, highlighting operational achievements. The MD said ₹200 crore was saved through improved revenue measures. Additional operational highlights included:

• Maintenance of 705 11 kV lines

• Servicing of 20,000 transformers

• Repair of over 40,000 hazardous installations

• Progress under solar and rural electrification schemes

KERC member HK Jagadish was present.