THIRUVANANTHAPURAM:The State Electricity Regulatory Commission (KSERC) has notified the draft multi-year tariff regulations, kicking off a process under which the cash-strapped KSEB is expected to apply for a tariff hike in the near future.
The Draft KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2018, require distribution licensees, including the KSEB, to file tariff proposals for four years at one go. Once it is finalised after public hearings, licensees can submit tariff proposals for a single ‘block’ of four financial years from April 1, 2018 to March 31, 2022. KSERC will hear the consumers’ opinions on the draft policy in Thiruvananthapuram on October 1. KSERC officers said they hope to finalise the regulations by November-December. Under Multi-year tariff (MYT) regime, the KSERC will issue a single order for the four-year period, but the tariffs for each year can be ‘adjusted’ according to yearly requirements. MYT can prevent tariff shock and provide long-term signals regarding power tariffs. But this is also a flexible set-up where the KSEB and other licensees can approach the commission for a tariff revision in-between.
On its part, the KSEB is pushing for a tariff hike this year itself, as 2019 is election year and governments are usually wary of hiking tariffs when elections are around the corner. But whether the state government would go for a hike so soon after the mid-August floods remains to be seen.
KSEB chairman and managing director N S Pillai said the power utility was in the process of finalising its Aggregate Revenue Requirement (ARR) and Expected Revenue from Charges (ERC) petition - in layman’s terms, KSEB’s budget - which has to be submitted to the commission for approval. A tariff hike is imperative for KSEB which is facing a revenue gap to the tune of `6,500 crore, Pillai said.
The initial draft of the regulations was published in 2017, and the latest one incorporates revisions.
In reality, the existing tariff regulations are also in MYT format, but for a period of three years instead of the proposed four. But the KSEB had gone to court against it and its intention was never met in full.