The Karnataka Electricity Regulatory Commission (KERC) issued a regulatory order on April 17, 2026, concluding the Annual Performance Review (APR) for Hubli Electricity Supply Company Limited (HESCOM) for the Financial Year 2024-25 (FY25). The order finalizes the true-up outcomes for the period based on a review of actual financial and operational data against approved projections.
Distribution Loss Targets and Performance Penalties
The KERC review included a technical evaluation of HESCOM’s distribution loss performance. The Commission maintains a regulatory vision for the utility to reduce Transmission and Distribution (T&D) losses to a level below 15%.
- Regulatory Finding: HESCOM failed to meet the specific T&D loss targets defined for the review period.
- Outcome: The Commission has penalized HESCOM for non-compliance with its distribution loss efficiency benchmarks.
Financial Performance, ARR, and True-up Results
Following prudence checks on HESCOM’s filings, the Commission determined the approved Aggregate Revenue Requirement (ARR) and identified a revenue surplus of ₹153.46 crore.
A technical finding in the financial review involves the status of Return on Equity (RoE). The Commission disallowed the RoE claim submitted by HESCOM. This disallowance is based on the utility’s financial position, as HESCOM reported a negative net worth of ₹7,680.89 crore as of April 1, 2024. Under the governing regulatory framework, utilities with a negative net worth do not qualify for RoE allowances.
Consumer Impact and Refund Mechanism
Based on the finalized revenue surplus, KERC has mandated a consumer refund of 10 paise per unit. The implementation of this refund is subject to the following technical requirements:
- Refund Timeline: Adjustments are to commence from the first meter reading on or after May 1, 2026, and conclude by April 30, 2027.
- Disbursement Method: The utility must issue refunds in equal monthly installments during the FY2026-27 billing cycle.
- Billing Label: The Commission requires all adjustments to be identified on bills under the label “FY25 True up Charges.”
- Applicability: These adjustments apply to all consumer categories, excluding those under the Discounted Energy Rate Scheme.
Mandatory Regulatory Directives for HESCOM
The Commission has issued several mandatory directives that HESCOM is required to execute:
- Completion of Aadhaar linkage for all irrigation pump (IP) set connections within a three-month window.
- The requirement to link future subsidy releases to the completion of Aadhaar indexing for IP sets.
- The establishment and maintenance of separate account heads for true-up adjustments to ensure financial transparency.
- Adherence to the 10% penalty protocol for any shortfalls in renewable energy procurement.
- Direction to expedite the implementation of the KERC Intra State Deviation Settlement Mechanism and Related Matters Regulations, 2025.
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