Kochi: Kerala High Court struck down a provision in the Kerala State Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2021 that allowed the amount allocated to the Master Trust (Pension Fund) to be included for tariff determination

The government constituted the Master Trust to provide benefits, including staff pension, when KSEB became a company in 2013. KSEB allocates Rs 407.2 crores to Master Trust each year. The latest High Court order is a massive relief for consumers as the electricity tariff will be reduced by 17 paise per unit. 

The bench of Justice Murali Purushothaman issued the order to remove Clause 34(4) of the Tariff Regulation after considering a petition filed by the Kerala High Tension and Extra High Tension Industrial Electricity Consumers Association against the hike in power tariff. 

When KSEB became a company, it was agreed that only the interest on the amount sanctioned as a bond would be calculated along with the total cost of power generation. Kerala State Electricity Regulatory Commission adhered to this decision when they fixed the power tariff in 2014 and 2018. 

Further, the draft of the amendments made to the Regulations of 2021 also mentioned that only the interest on the principal amount must be considered while determining the tariff. 

However, the final draft of the regulations permitted the Regulatory Commission to consider the amount disbursed to the master trust and the interest thereon for determining the tariff. 

Master Trust is funded through bonds. KSEB had previously issued 10-year and 20-year bonds. While the government is obligated to repay the principal and interest on the 10-year bond, KSEB is bound to repay the amount spent on the 20-year bond, which is covered through the amount levied as power bills.