Karnataka Electricity Regulatory Commission has approved an increase in power tariffs for commercial and industrial categories for FY 2025-26, affecting a range of consumers in the state. The commission approved the revision on a petition from the electricity distribution companies, which argued that existing allocations and tariff structures would leave them unable to meet the cost of supplying free power to agricultural pump sets. The decision follows a review of revenue shortfalls.

The distribution companies, known as ESCOMs, told the commission that if the prior tariff order were implemented for the LT-4a category, they would face a significant revenue gap that was not provided for in the state budget. The ESCOMs said they could neither recover the shortfall from the government nor from consumers under the existing rates and therefore sought modification of the tariff framework. To bridge the deficit, they proposed reducing the rate for agricultural pump sets and raising charges for commercial and industrial establishments.

Industry associations lodged objections to the proposal, warning of adverse effects on businesses, but the commission concluded that protecting the agricultural economy was a priority in its review. The commission observed that the state government had allocated a subsidy amount of Rs 160.21 billion (Rs 160.21 bn) to meet the cost of free power supply to LT-4a consumers, yet the ESCOMs would still be unable to recover the full cost of supply to that category. The review therefore rebalanced tariffs across categories.

The order is intended to secure the financial viability of the distribution companies while maintaining subsidised supply to farmers, and the commission expects the revised tariff design to address the immediate shortfall. The decision will require ESCOMs to adjust billing structures and may prompt further regulatory oversight as stakeholders assess the impact on commercial, industrial and agricultural consumers.