Performance Analysis of Karnataka Power Sector in India in the Context of Power Sector Reforms

With the enactment of Karnataka Electricity Reform Act (KERA), 1999, Karnataka power utilities underwent major restructuring. The objective of the paper is to assess the Karnataka power sector performance in the context of reforms, using select technical and financial indicators. A Power Sector Performance Index (PPI) is computed to capture the overall performance. Some indicators, like energy and peak deficits, per capita electricity consumption, have shown improvement after reform, nonetheless, they still lag behind other major Indian states. The installed capacity increased fairly after reform, however, the capacity utilisation rate declined in the post-reform period. On the positive note, the transmission and distribution (T&D) loss in Karnataka reduced tremendously since 1999 as compared to other major states. Average revenue realisation rate rose after reform, however, the realisation rate varies widely across consumer categories, due to cross-subsidization by few categories. Overall, the PPI value increased from 1998-99 to 2012-13 indicating better performance after reform. The ranking improved from 8th to 3th position, implying higher progress over time vis-a-vis other states as well. There is, however, scope for further improvement. Future policies should focus on toning up poor capacity utilisation rate, and reducing price differential and power subsidy burden of the government.