The Kerala State Electricity Regulatory Commission (KSERC) is pushing for a number of significant changes in the regulations governing the determination of electricity tariffs in the State.
Two of the key takeaways from the draft KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2021, published by the commission this month revolve around the method of sharing of profits and losses from the electricity business with consumers, and the sale of surplus energy.
Profit sharing
Under the ‘Mechanism for sharing of gains or losses on account of controllable factors,’ the draft says that half the amount of the aggregate gain from power generation, transmission or distribution business — as determined by the commission — “shall be passed on to the consumers as a rebate in the tariff.”
The aggregate loss shall not be passed on to the consumers. The existing 2018 regulations recommend one-third of the gain to be passed on as a rebate in the tariff.
According to the draft, the commission can permit the licensee (the KSEB, for instance) to sell surplus electricity to its consumers instead of selling it in the open market or power exchanges. This can be done in two ways — the surplus can be sold to open access consumers (industries) at a price existing in the power exchange at the respective time block of the day. The licensee should declare the surplus electricity available in advance through its website. For other consumers, the sale can be made at the power exchange price at the average price of the day subject to certain conditions.
Reduce cross-subsidy
Further, the draft says that the commission would also strive to gradually reduce the cross-subsidy among consumer categories with respect to the average cost of supply.
The commission will fix the retail supply tariff for each consumer category of various distribution licensees separately on the basis of their aggregate revenue requirement and expected revenue from charges (ARR & ERC), the truing-up of accounts, and after considering the overall performance, the draft noted.
For five years
According to the draft, the regulations will be in force for a five-year period from April 1, 2022, to March 31, 2027. Generation, transmission and distribution licensees are required to file, under the multi-year tariff (MYT) framework, ARR and tariff petitions for each year of the five-year control period and the capital investment plan for each year by December 15, 2021.
The commission has published the draft on its website. The commission noted that it consider objections and suggestions before finalising the regulations.
