Power Minister K Krishnakutty inaugurated a small hydroelectric project in Thrissur Photo Credit: Special Arrangement
the story So Far: The gazette notification on the Electricity (Amendment) Rules, 2022 was issued on 29 December. Ever since the Union power ministry shared the draft rules with the states last August, the CPI(M)-led government in Kerala Strongly opposes Rule 14 allowing distribution companies (DISCOMs) to automatically recover from consumersExpenses arising from changes in fuel price and power purchase cost, on a monthly basis.
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What are the new rules?
Center introduced Electricity (Amendment) Rules, 2022, to amend the Electricity Rules, 2005. Rule 14 of the Rules requires the State Electricity Regulatory Commission to specify the price adjustment formula for automatically passing on the costs through the consumer tariff on a monthly basis. “Fuel and power purchase adjustment surcharge shall be calculated and billed to consumers automatically without regulatory approval process, on a monthly basis, as per the formula prescribed by the concerned State Commission,” it says.
What has been the stand of Kerala?
The state government has argued that giving discoms the freedom to automatically pass on the above costs through electricity bills puts consumer interests at risk. The revision creates a “volatile pricing situation” similar to petrol and diesel prices in the power sector. It added that consumers will have to face frequent fluctuations in prices. It further observed that the important role played by the State Electricity Commission in fixing the surcharge would be diluted. Power Minister K. Krishnankutty announced that his department would seek legal advice from the state-run Kerala State Electricity Board (KSEB) on how best to implement the rules without burdening consumers. On January 11, Mr Krishnakutty accused the Center of ignoring the state’s stand and going ahead with the amendment.
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What is the role of the regulator?
Kerala State Electricity Board (KSEB) Logo
Till now, KSEB used to file petition for collecting thermal fuel surcharge before the Kerala State Electricity Regulatory Commission on a quarterly basis. Since Kerala produces only 30% of its electricity demand within its borders, power purchase expenditure is quite high, especially during the summer months when demand increases. Normally, the Commission finalizes the decision on the KSEB petition after holding a public hearing. According to the state government, doing away with this sanity check would harm the general public.
what next?
With the Center notifying the Electricity (Amendment) Rules, 2022, Mr Krishnakutty convened a high-level meeting on January 10 to discuss the measures to be adopted in the state. He directed the power department to examine whether the potential tariff fluctuations arising out of the new arrangement could be balanced through lower tariffs during the state’s extended monsoon months when power procurement and consumption levels are low. Is. During the rainy season, hydroelectric power generation is high, meeting more than 50% of demand. The minister has also suggested that the power purchase cost should be kept to a minimum in the remaining months to avoid burden on the consumers. But experts argue that such safeguards will only work in a situation where a state-run entity like KSEB is at the helm of things. The real worry, they say, lies in the future when they may get dumped in a scenario where private players enter electricity distribution in Kerala.