Tata Power seeks electricity distribution licence in Karnataka: What it means for consumers

From internet providers to telecom services, people in Karnataka can choose their service providers and switch whenever the service does not meet their needs. Electricity, however, has never been part of this choice-based system. Currently, electricity supply in Karnataka is managed by Escoms, where each area is assigned a fixed distribution company based on geography, leaving consumers with no option to switch even if the service is unsatisfactory.

In a move that could change 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 plans to serve over 1.86 lakh consumers within three years of obtaining the licence.

The proposal has triggered sharp opposition from multiple unions across the state, who have warned of fierce agitations and even court action if it moves ahead. It raises a fundamental 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 argue that the biggest change would be consumer 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 services, though questions remain about how infrastructure would be shared, duplicated, or developed under a parallel system. Poor service, they argue, would directly risk losing consumers.

Supporters also argue that competition could improve efficiency. Karnataka's Escoms continue to report high losses from leakages, theft, and delays in recovery. These inefficiencies ultimately feed into tariff pressure or require government support. If competition forces better performance, overall system costs could come down over time.

Financial stress

The financial condition of Karnataka's power distribution companies paints a grim picture. The accumulated losses of the state's Escoms have risen from about ₹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 over the same period. Experts say these figures reflect a system under increasing financial stress, and consumers ultimately bear the cost through tariff revisions, government support, additional borrowing, or delayed investments.

Renewable sources

Supporters also point to changes in the power market itself. Electricity from newer renewable sources such as solar is 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 proponents 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

Opponents argue that 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 could cherry-pick profitable areas, leaving the less lucrative regions to the public sector, potentially undermining universal service obligations. Concerns also exist about the duplication of infrastructure, which could lead to increased costs and inefficiencies. The unions have stressed that any move towards privatisation must ensure that consumer interests and workers' rights are protected.

The KERC is expected to hear the application and consider the views of all stakeholders before making a decision. The outcome could reshape the electricity distribution landscape in Karnataka, potentially offering consumers more choices while addressing the financial challenges faced by the state's power utilities.