THIRUVANANTHAPURAM: In a major relief for consumers, the Kerala State Electricity Regulatory Commission (KSERC) on Friday authorised the Kerala State Electricity Board to revive power purchases under the four revoked long-term agreements.
The agreements, signed in 2014, were cancelled by the commission in May this year. The latest order came on a review petition filed by the board. The 25-year, 465MW power supply agreements (PSAs) with Jhabua Power Ltd, Jindal Power Ltd and Jindal India Thermal Power Ltd are design, build, finance, own and operate (DBFOO) contracts. The commission cancelled them citing violations, including lack of prior approval and deviation from guidelines issued by the central power ministry. Though the order was issued in May, the commission allowed the board to continue buying power till August 21.
Subsequently, to make up for shortages, the board ended up spending more money on short-term purchases. The additional cost incurred by the board is to be levied from consumers in the form of surcharges.
In its petition, the KSEB said the state was facing a grave power crisis due to the deficit monsoon and the cancelled PSAs. The market rate is much higher than what was quoted in the four PSAs, it said. In keeping with the current market trend, the per unit energy charge to replace the shortfall comes to around `5-6 a unit, which in turn will lead to tariff hikes. The board also pointed out that it was liable to pay nearly `500 crore in damages to the suppliers for the termination of the agreements.
The policy flip-flop was initiated when the state government issued a directive to the commission to review its order. The public interest directive was issued under Section 108 of the Electricity Act, 2023.
The board has been asked to submit a compliance report within one month.