Onam power needs in Kerala: KSEB’s ₹750-crore purchase may push charges up 15 paise

Thiruvananthapuram: The Kerala State Electricity Board (KSEB) has approached the Electricity Regulatory Commission seeking approval to buy power at high rates to avoid electricity restrictions.

The board has sought permission to enter into contracts to purchase electricity at rates ranging from ₹9.40 to ₹12.50 per unit until May next year. The Regulatory Commission is expected to take a decision after a public hearing following Onam.

KSEB plans to purchase 85 crore units of electricity between September and May 2027 at an estimated cost of ₹750 crore. The average price will be around ₹9.50 per unit.

The Regulatory Commission has approved an average power purchase price of ₹4.90 per unit. If the additional cost is recovered from consumers, electricity tariffs could rise by around 15 paise per unit.

KSEB has accepted 24 bids from nine companies for the proposed purchases. The contracts will require approval from the Regulatory Commission.

With water levels in the reservoirs falling, KSEB has to reduce hydropower generation. This has increased its dependence on power purchased from outside the state.

The board is currently spending between ₹10 crore and ₹15 crore a day to avoid electricity restrictions. Much of this power is being purchased through the power exchange.

The maximum price at the exchange is ₹10 per unit. However, availability is uncertain and KSEB cannot know in advance whether sufficient power will be available when required.

Power is currently available through the exchange as northern India is receiving rainfall. However, KSEB is concerned that electricity restrictions could become necessary if demand rises during the Onam season while power availability through the exchange falls.

Only 2.7% of the purchases from outside state 

The proposed short-term contracts account for only 2.7% of the electricity KSEB purchases from outside the state in a year. However, because of the high rates, they are expected to account for nearly 7% of the annual power purchase expenditure.

The Commission has approved ₹12,500 crore as the power purchase cost for the current year. Most of the electricity being bought at the higher rates under the proposed contracts is intended to meet night-time demand.

Solar power prosumers generate electricity during the day and receive power at night in return. As a result, the burden of the higher purchase cost will fall on other consumers.

The Regulatory Commission has not approved power purchases at such high rates in recent times. Its decision on KSEB's latest proposal will follow the public hearing after Onam.