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KSEB Power Purchase Strategies Slammed

Kerala State Electricity Board (KSEB), it appears, has little flair for ‘power shopping’.

Published: 17th August 2014 06:00 AM  |   Last Updated: 17th August 2014 02:26 AM   |  A+A-

THIRUVANANTHAPURAM: Kerala State Electricity Board (KSEB), it appears, has little flair for ‘power shopping’. Flawed power purchase strategies of the KSEB are exposing the state to the ‘vagaries and uncertainties’ of the short-term power market, the State Electricity Regulatory Commission (SERC) has concluded.

Passing orders on the annual budget of the KSEB for the 2014-15 fiscal, the Commission has fixed a price ceiling beyond which the KSEB cannot make short-term purchases from traders and energy exchanges without prior approval.

(Power utilities such as the KSEB dash to the short-term power market to meet immediate requirements, but it is hard on the purse, and the burden ultimately falls on the consumer’s shoulders).

The Commission has instructed the KSEB to file monthly statements on short-term purchases from traders, exchanges and the Unscheduled Interchange (UI), adding that the combined average monthly cost of such power purchases should not exceed Rs 5 per unit. Additionally, the average cost of short-term purchases for making up for any shortfall in contracted power also should not exceed Rs 5 per unit.

It is such additional purchases- at expensive rates that finally burden the consumer with surcharges on the bi-monthly power bill.

In fact, the Commission has laid the blame fully at the KSEB’s door, alleging that the latter has not concluded any long-term purchase contracts so far.

“There is an element of truth in the allegations raised in the public hearings that the licensee was not alert enough to take timely sensible commercial decisions, thereby losing the opportunities to more vigilant neighbouring states. Even for contracted power, there is no assured (transmission) corridor access,” the Commission headed by T M Manoharan noted. “No fresh long-term power purchase agreements have been concluded so far. It is well known that statutory provisions give priority for long-term agreements to medium and short-term agreements,” the Commission said.

With little being added to the state’s power generation capacity in recent years, the KSEB hopes to meet 20 per cent of its total annual energy requirement through traders and energy exchanges. This accounts for 40 per cent of the total power purchases made by the KSEB in a year. And the total power purchases account for nearly 60 per cent of the KSEB’s annual revenue requirement!

According to the KSEB, it has agreements in place to import 2,995 million units (MU), but it is unable to do so due to lack of transmission lines. But the Commission concluded that the KSEB should have anticipated this scenario beforehand.

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