KSERC drops several draft proposals

While finalising regulations for determining power tariffs

In finalising the regulations for determining electricity tariffs in the State, the Kerala State Electricity Regulatory Commission (KSERC) has either removed or toned down a number of draft proposals that have invited the ire of the State-run Kerala State Electricity Board (KSEB) and power sector unions.

The proposals in the draft regulations pertaining to separate retail tariffs, sale of surplus electricity, definition of Average Power Purchase Cost (APPC) and return on net fixed assets had drawn flak, among others.

The ‘KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2021’ published on November 16 avoids several of these proposals or sports modifications. The commission has retained uniform retail supply tariffs for each consumer category under different distribution licencees in the final regulation. The commission’s draft proposal to have separate tariffs for them had drawn flak.

Further, the commission has removed a draft proposal which required the licensee (KSEB, for instance) to sell surplus energy to its consumers instead of selling it in the open market or power exchanges. The KSEB had vehemently objected to this provision at a public hearing on the draft.

The commission had also proposed to hike the rate of return on net fixed assets from 3% to 7% in connection with the electricity business. This too had drawn opposition. In the final regulations, the return has been modified to 5.5%.

The commission has retained the clause on APPC – the rate at which the distribution licensee (KSEB) would purchase excess energy injected into the power system by a renewable energy ‘prosumer’ – but modified it to include ‘self generation by the licencee.’ The draft proposal for APPC had not included the cost of KSEB’s own generation, a factor which the KSEB had alleged would hurt its finances.

At the public hearing held on September 15, the KSEB had informed the commission that several of the draft proposals were open to misuse. The CITU and INTUC-backed unions in the State power sector had criticised the draft proposals as supporting the privatisation policies of the Centre.

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