Srinagar, Aug 28: The industrial sector has challenged the Jammu and Kashmir Electricity Regulatory Commission’s revised power tariff, questioning how an increase of nearly 10 percent was imposed on industrial consumers when the tariff proposal placed before stakeholders had envisaged a 5 percent across-the-board hike.
The challenge has been made through a 17-page review petition filed before the Joint Electricity Regulatory Commission (JERC) against Order No 06 of 2026 dated August 20, which revises the tariff applicable to industrial consumers from September 1, 2026.
The petition seeks a limited review of the industrial tariff rather than reopening the entire tariff determination.
At the heart of the FCIK’s petition is what the industry describes as a “striking departure” between the proposal subjected to stakeholder consultation and the tariff ultimately imposed.
The tariff proposal contemplated a 5 percent increase across the board. However, the final order raises the LT Industrial Supply energy charge from Rs 4.20/kVAh to Rs 4.60/kVAh, an increase of 9.52 percent, while the HT industrial tariff at 11 kV rises from Rs 4.10/kVAh to Rs 4.50/kVAh, or 9.76 percent. Fixed and demand charges have also been enhanced.
The petition argues that the widely reported overall increase of 6.83 percent does not reflect the actual burden on individual categories.
The 6.83 percent figure represents the aggregate increase in tariff revenue, from Rs 7352.87 crore under the existing tariff to Rs 7854.94 crore under the revised tariff.
For industry, however, the increase in the principal energy charge is approaching 10 percent – almost twice the 5 percent proposal placed before stakeholders.
FCIK has not disputed JERC’s statutory authority to depart from the tariff proposed by the distribution companies.
Instead, the petition questions the absence of a clear category-specific justification for imposing a substantially higher increase on industrial consumers.
It argues that where the final tariff imposes upon a particular category a burden approaching twice that contained in the proposal subjected to consultation, there should be a clear and specific justification, particularly in the interests of transparency and effective stakeholder participation.
One of the strongest arguments raised in the petition relates to the absence of category-wise and voltage-wise Cost of Supply data.
The petition points out that JERC itself recorded that the required data was not available with the distribution licensees and that the necessary information had not been submitted despite earlier directions.
The commission consequently reiterated its direction for the data.
The industry has questioned how a near-10 percent increase in industrial energy charges can be justified when the data required to establish the actual cost of supplying industry at different voltage levels is admittedly unavailable.
The petition further argues that the combined Average Cost of Supply of Rs 6.88/kWh determined by JERC is a system-wide average and cannot establish the actual cost of serving LT industrial consumers, 11-kV HT consumers or consumers connected at higher voltages.
Nor, it says, does the average establish the technical or commercial losses specifically attributable to industrial consumption.
The petition therefore questions the basis for imposing a disproportionately higher increase on industry using a system-wide methodology.
Another major argument concerns distribution losses.
Industrial consumption in the organised sector is substantially or essentially metered, while HT industrial consumers are subject to precise energy and demand metering.
Yet the tariff order proceeds on distribution-loss assumptions of approximately 19 percent for KPDCL and 15 percent for JPDCL, while also recording that actual losses remain above approved targets.
The petition says the order does not establish, category-wise and voltage-wise, how much of these losses arise from technical losses, theft or pilferage, unmetered consumption, defective billing, collection failures or other commercial inefficiencies.
The industry has accordingly argued that efficiently metered consumers should not be made to bear costs generated elsewhere in the distribution system.
The petition invokes JERC’s own stated principle that “inefficiencies cannot be passed on to the consumers”, arguing that this principle must have practical consequences rather than remain merely an observation in the tariff order.
The treatment of collection efficiency has also been questioned.
The DISCOMs have projected revenues at 93 percent collection efficiency, effectively recognising a 7 percent non-collection component.
The petition argues that once electricity has been supplied, metered and billed, failure to recover dues from one consumer should not result in an additional burden on another consumer who regularly pays electricity bills.
It has consequently asked JERC to reconsider whether the 93 percent collection-efficiency assumption is consistent with the principle that collection efficiency is a controllable parameter.
The petition also places more than Rs 102 crore in bad-debt provisions under scrutiny – Rs 51.80 crore for KPDCL and Rs 50.96 crore for JPDCL.
It argues that there is no demonstrated basis for assuming that these bad debts arise proportionately from industrial consumers and has sought category-wise disclosure of arrears, including government, domestic, commercial and industrial arrears, amounts written off, recovery proceedings and the ageing of outstanding dues.
Power purchase expenditure has also been cited, though the industry has clarified that it is not seeking denial of legitimate power-purchase or establishment costs.
The approved combined net ARR stands at Rs 10,275.72 crore, while power-purchase expenses including transmission charges account for approximately Rs 4343.11 crore for KPDCL and Rs 4342.35 crore for JPDCL. The issue raised is how the overall ARR is allocated among consumer categories when category-wise and voltage-wise cost of supply data is unavailable.
The review petition further challenges the impact of the tariff on an industrial sector already operating under difficult conditions.
It points to geographical remoteness from major markets and raw-material sources, high freight costs, difficult topography, climatic constraints and, in Kashmir, a limited effective working season.
It says a significant number of industrial units are operating at low capacity utilisation and struggling for viability.
Against this backdrop, the petition argues that a near-10 percent increase in a fundamental manufacturing input would increase production costs, depress capacity utilisation and reduce the competitiveness of locally manufactured goods.
The industry has also drawn attention to the DISCOMs’ own projections, which indicate limited industrial expansion over the next three years.
KPDCL projects LT industrial connected load to increase from 184.94 MW in 2026-27 to only 190.53 MW in 2028-29, while HT industrial load is projected to rise from 160.16 MW to 168.84 MW.
HT-PIU connected load remains stagnant at 4.57 MW.
JPDCL, meanwhile, projects LT industrial connected load at 114.011 MW throughout the three-year period, with HT Industrial Supply and HT-PIU remaining at 565.681 MW.
Its industrial consumer numbers are also projected to remain virtually unchanged.
The petition contrasts this weak industrial outlook with the much stronger growth projected in other categories.
KPDCL’s domestic consumers, for instance, are projected to rise from about 13.07 lakh to 17.03 lakh during the same period, while industrial consumer growth remains negligible.
The industry argues that the tariff order therefore creates a paradox: it projects little industrial growth while simultaneously making electricity, a fundamental industrial input, substantially more expensive.
The review petition has also questioned the effectiveness of stakeholder consultation.
It states that the industry did not receive effective prior intimation that would have enabled it to obtain and study the tariff petitions, consult constituent industrial associations and prepare informed written objections.
At the Srinagar hearing, only three persons attended.
The petition says the industrial representative was contacted by a JERC official only after the hearing had commenced, leaving no adequate time to study the petition or consult members.
More importantly, the petition argues that no stakeholder had an opportunity to specifically object to the eventual near-10 percent industrial increase because the proposal subjected to consultation was for a 5 percent increase.
It maintains that even a stakeholder who had fully studied the tariff petitions could not have made an informed objection to the specific regulatory basis for raising the LT industrial tariff by 9.52 percent and the HT 11-kV tariff by 9.76 percent.
The petition also asks JERC to consider the cumulative effect of the revised base tariff, fixed and demand charges and the time-of-day tariff.
While ToD is not made a principal ground of challenge, the industry points out that multi-shift and continuous-process industries have limited flexibility to shift consumption to lower-cost periods.
The petition describes its case as a cumulative one, bringing together the difference between the 5 percent proposal and the 9.52-9.76 percent industrial increase, absence of cost of supply data, continuing distribution losses, 93 percent collection efficiency, more than Rs 100 crore in bad debts, and the difficult financial condition of existing industry.
Among the principal reliefs sought is a stay on the enhanced industrial tariff pending disposal of the review petition, with existing LT and HT industrial consumers to continue being billed at the pre-August 20 tariff, subject to adjustment after the final determination.
The petition has also sought reconsideration of the LT energy charge of Rs 4.60/kVAh and HT 11-kV energy charge of Rs 4.50/kVAh. Alternatively, it has asked that any industrial tariff revision be restricted to not more than the 5 percent increase contained in the proposal, subject to stakeholder consultation, pending reliable category-wise and voltage-wise Cost of Supply data.
It has further asked JERC to direct KPDCL and JPDCL to furnish category-wise and voltage-wise cost of supply, technical losses, commercial losses and theft, collection efficiency, arrears and bad debts, network costs and the calculations used to justify the differential increase in industrial energy charges.
The petition concludes by stressing that industry is not seeking exemption from paying the legitimate cost of electricity it consumes.
Its objection, it says, is to being made to bear costs arising from losses, non-collection or other inefficiencies without evidence establishing that such costs are attributable to industrial consumers.
The central question posed before the regulator is: “When the utilities sought 5 percent, what category-specific cost or efficiency finding justified imposing nearly 10 percent upon industry” – particularly when the data required to establish the actual cost of serving industry is admittedly unavailable?
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