The report, tabled in the Legislative Assembly, said new hydro projects proposed by the state-run Karnataka Power Corporation Limited (KPCL) were either awaiting clearance from MoEF or held up due to local agitation.
"Renewable energy sources in the State also remained underutilised", said the report (Commercial) for the year ended Mar 31, 2010.
The operational performance of thermal power stations was sub-optimal due to fixation of generation targets below the available hours, low plant load factor, inefficient coal management, failure to undertake timely renovation and modernisation and life extension schemes.
"The consumption of coal was in excess as compared to designed parameters. The poor realisation of dues and consequent accumulation of outstanding from ESCOMs (electricity supply companies) forced the KPCL to resort to borrowings entailing payment of interest. This had also affected its ability to take up new projects".
The CAG said the government needs to evolve a long-term strategy for capacity augmentation through its own agencies and by private sector participation.
From a long-term perspective, there is a need to diversify energy sources and provide clean energy. Development of hydro and renewable energy sources need to be accorded top priority for energy security.
The government also needs to encourage, adopt and implement demand side management and energy efficiency measures in addition to capacity addition, it added.