The Kerala State Electricity Regulatory Commission (KSERC) is likely to issue its final orders on electricity tariff revision proposals submitted by the Kerala State Electricity Board (KSEB) within two weeks.
The Kerala High Court on Thursday quashed a regulatory provision that allowed the inclusion of repayment of the principal amount on bonds issued to the Master Trust (pension fund) of KSEB employees for computing the KSEB’s aggregate revenue requirement (ARR). The KSERC will have to factor in this development before issuing its orders on the tariffs.
The High Court order quashing Regulation 34(IV) of the KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2021, came on a petition submitted by the Kerala HT-EHT Industrial Electricity Consumers Association and two other petitioners. Awaiting the court’s decision, the commission had extended the validity of the prevailing tariffs up to September 30. The commission is not likely to go in for another extension, sources said.
Proposed hike
The KSEB filed proposals for revising the electricity tariffs for the financial years from 2023-24 to 2026-27 in February this year. The hike proposed for 2023-24 is 40.64 paise a unit. In 2023-24, the KSEB hopes to raise an additional revenue of ₹1,044.43 crore through the hike. For 2024-25, it proposed an increase of 31 paise a unit eyeing a revenue of ₹8,34.77 crore. For 2025-26, the hike proposed is 16.77 paise (additional revenue ₹472.64 crore), and for 2026-27, one paisa a unit (₹29.80 crore).
The commission had conducted a series of public hearings on the proposals, but the High Court had asked it to hold the final orders till the court’s verdict on the plea filed by the HT-EHT Industrial Electricity Consumers Association was out.
Burden on consumers
Every year, ₹407.2 crore is sanctioned to the Master Trust. The petitioners had argued that by allowing the principal amount to be reckoned in the calculation of the ARR, the burden of its repayment would be passed on to the consumers through the tariffs, which was unfair. Further, they noted that the draft regulations had provided only for the payment of interest on the bond issued to the Master Trust to be reckoned when computing the ARR, and not the payment on the principal. Regulation 34 (IV) of the draft clearly says that “only the payment of interest on the bonds issued to the Master Trust will be approved for computation of ARR and that the amount of repayment of such bonds will not be reckoned.” However, the final regulations issued by the commission noted that both interest and the repayment on the principal amount will be reckoned when computing the ARR. This would lead to passing the burden of repayment of the principal amount on the Master Trust bonds on to the consumers, the association argued.
In Thursday’s verdict, the High Court ordered that the final tariff regulations, to the extent it differs from the draft regulations, ‘‘is declared illegal, and is set aside.’‘
