Kochi: The subsidy currently given to electricity consumers using less than 240 units every two months in Kerala may soon be withdrawn. Around 65 lakh consumers receive a ₹148 discount on their bills under this category, but this benefit is now under threat

The Kerala State Electricity Board (KSEB) funds this subsidy using the electricity duty it collects from consumers. However, a shift is expected after the High Court delivers its verdict on a pending case related to this duty. Once resolved, the collected duty is likely to be redirected to the state government instead.

The subsidy was introduced in 2012 when Oommen Chandy was Chief Minister. It came as a relief measure during a tariff hike, aimed at protecting low-consumption households from the impact of increased rates. The scheme currently costs ₹303 crore per year to maintain.

In 2013, when the Electricity Board was converted into a company, a tripartite agreement was signed between the government, KSEB, and employee organisations. This agreement outlined the transfer of government assets to the company and included provisions for pension payments through a Master Trust.

As per the agreement, KSEB was to bear 65.4 per cent of the pension liability, while the state government would cover the remaining 34.6 per cent. The government’s share was to be paid over 10 years using the electricity duty collected by KSEB on its behalf.

That 10-year period ended on 1 November 2023, and the government issued an order directing that the duty henceforth be remitted directly to its accounts. Additionally, Section 6(9) of the tripartite agreement—concerning the funding of the Master Trust—was repealed.

The KSEB Pensioners’ Association filed a case in the High Court challenging the repeal of this section, arguing that it would impact pension disbursals. In response, the High Court stayed the government’s order. As a result, KSEB withheld the duty amount instead of transferring it to the state.

Anticipating an adverse judgment, the state government in July reversed its earlier decision and reinstated the repealed provisions related to pension funding. This move is expected to nullify the basis of the legal case.

Pension payments also affected

The annual collection from electricity duty amounts to ₹1,500 crore. KSEB currently has 41,000 pensioners, and the yearly pension requirement stands at ₹2,500 crore. Of this, the Electricity Regulatory Commission has permitted KSEB to recover ₹1,400 crore through electricity tariffs. The remaining ₹1,100 crore was being met using the electricity duty—raising concerns about how pension payments will be sustained if that duty is redirected to the state treasury.