Power crisis: Kerala seeks urgent SC hearing, claims Rs 12,570 crore loss

New Delhi: The Kerala government has approached the Supreme Court seeking an urgent hearing of its plea challenging the rejection of long-term power purchase agreements (PPAs), citing the worsening power situation in the state.

In its application before the Supreme Court, Kerala has submitted that the cancellation/non-approval of the long-term power purchase agreements has deprived the state of cheaper power and resulted in a significant additional financial burden.

According to the application filed by the state, Kerala has so far incurred losses of Rs 12,570 crore as a result of having to procure power at higher rates. The state has further submitted that the financial impact during 2024-25 alone was Rs 748.20 crore. The application was filed before the Supreme Court by Kerala's Standing Counsel Sayid Marzook Bafaqi.

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The dispute relates to four long-term power supply agreements entered into by the Kerala State Electricity Board (KSEBL) in 2014 for procurement of power on a long-term basis.

The four agreements covered 465 MW of power. They were with Jhabua Power Ltd for 115 MW and 100 MW, Jindal Power Ltd for 150 MW, and Jindal India Thermal Power Ltd for 100 MW. The 115-MW Jhabua agreement carried a tariff of Rs 4.15 per unit, while the other three agreements carried a tariff of Rs 4.29 per unit, as per the bid-date tariffs. The agreements were for a period of 25 years.

KSEBL began procuring power under these agreements after obtaining provisional regulatory approval. The procurement continued until 2023.

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However, the Kerala State Electricity Regulatory Commission (KSERC), in an order issued in May 2023, declined to grant final approval to the four agreements, holding that the procurement process had deviated substantially from the standard bidding guidelines and that the deviations had implications for consumers and the state.

The state government subsequently invoked Section 108 of the Electricity Act, 2003, directing the regulatory commission to reconsider its decision in the public interest. Acting on the government's direction, KSERC reviewed its earlier decision in December 2023 and approved the four agreements.

The power generators challenged the review order before the Appellate Tribunal for Electricity (APTEL). APTEL set aside the KSERC review order in July 2024. The matter then reached the Supreme Court. In its judgment in September 2024, the Supreme Court held that the state government's policy directions under Section 108 could not override the quasi-judicial functions of the regulatory commission. However, the Supreme Court restored KSEBL's original appeal against the KSERC order of May 2023 to the file of APTEL for consideration on the remaining grounds.

APTEL subsequently dismissed KSEBL's appeal in February 2025, upholding the KSERC's rejection of the power purchase agreements.

Kerala has then approached the Supreme Court challenging the APTEL decision. The state has pointed out that the absence of the long-term agreements has forced KSEBL to procure power from costlier sources, placing a substantial financial burden on the state.

The state in its early hearing application requested the Supreme Court to take up the matter on an urgent basis in view of the continuing power crisis and the financial implications of the non-availability of the contracted power.