KSEB may levy surcharge for four years to recover nearly Rs 5,000 crore in losses

Thiruvananthapuram, Kerala: Kerala State Electricity Board (KSEB) is likely to levy a surcharge for four years to recover nearly Rs 5,000 crore in past losses, with the amount expected to be collected in addition to regular electricity tariffs.

The surcharge will be imposed at a fixed rate per unit of electricity consumed. The Kerala State Electricity Regulatory Commission has directed KSEB to submit a proposal for recovering the outstanding amount, following a Supreme Court order.

The current electricity tariff is valid until March 31, 2027, and a revised tariff is to take effect from April 1. KSEB is expected to submit its application for the new tariff to the Regulatory Commission in November, along with its proposal for recovering the past losses.

KSEB normally recovers accumulated losses by increasing electricity tariffs. As of March 31, 2024, the board had an outstanding unrecovered loss of around Rs 6,645 crore. Regulatory commissions had deferred a decision on recovering the entire amount because doing so at once could lead to a sharp increase in electricity tariffs.

Although the outstanding loss stood at Rs 6,645 crore as of 2024, KSEB has already recovered part of the amount. The board will calculate and inform the commission of the remaining amount.

The amount to be recovered is expected to be at least Rs 5,000 crore. The commission will decide the surcharge so that the amount can be recovered in four equal instalments over four years.

Surcharge will effectively mean a tariff hike

The Regulatory Commission has also published a draft framework for determining electricity tariffs for the five-year period from April 1, 2027, to March 31, 2032.

The draft will be finalised after considering feedback from consumers. It proposes a further reduction in daytime electricity tariffs, which currently carry a 10% discount, while night-time tariffs are expected to increase.

The commission also plans to expand the use of Time of Day (ToD) meters, which separately record electricity consumption during daytime and nighttime hours.

While there are indications that there will not be a significant increase in tariffs for domestic consumers, having to pay the surcharge continuously for four years would effectively amount to an increase in electricity costs.

KSEB has different types of surcharges

KSEB currently levies a surcharge in certain circumstances when its power procurement cost in a month exceeds the amount approved by the Regulatory Commission. The difference is recovered through surcharges in subsequent months.

Under this mechanism, KSEB can levy a maximum surcharge of 10 paise per unit per month.

The surcharge proposed for recovering past losses, however, is different. It would be a special surcharge imposed with the approval of the Regulatory Commission specifically to recover the accumulated losses.