Fuel price hike to push up electricity surcharge as Kerala accepts Centre’s condition

Thiruvananthapuram, Kerala: The Electricity Regulatory Commission has lifted the cap on electricity surcharge in Kerala, paving the way for higher power bills if fuel prices increase.

The earlier upper limit was 10 paise per unit per month. The move is part of the conditions set by the Centre to allow the state to borrow more, and the cap was removed following a request by the state government.

Under existing practice, the commission approves a fixed annual amount for power purchase costs. As per central rules, any expenditure beyond this approved amount can be recovered from consumers as a surcharge. However, the state commission’s regulations had allowed only the additional cost arising from an increase in fuel prices used for power generation to be levied as a surcharge, with a ceiling of 10 paise per unit per month.

At present, the surcharge is already close to the 10 paise limit. With the cap now removed, consumers may have to pay a higher surcharge if there is a significant increase in fuel prices.

Between April and September this year, consumers were charged ₹124.52 crore as surcharge. Due to the cap, the Kerala State Electricity Board (KSEB) was unable to collect ₹140.78 crore.

During the six-month period, the additional expenditure incurred for power purchase amounted to ₹265.3 crore. However, this deferred surcharge cannot be collected immediately.

At the same time, KSEB can seek approval for this expenditure while submitting a revised cost application. If the commission approves it, electricity tariffs could be increased after factoring in the additional amount.

Meanwhile, KSEB has rejected claims that it failed to submit figures during the hearing on its petition seeking removal of the surcharge cap, stating that the allegation is baseless. During an earlier sitting, KSEB faced criticism from the commission after its representative failed to respond to a query on the surcharge collected so far. KSEB clarified that the figures were submitted on the Tuesday when the evidence recording took place.