Thiruvananthapuram: The Central Appellate Tribunal (Aptel) has dismissed the appeal filed by the Kerala State Electricity Board (KSEB) against the Regulatory Commission’s decision to cancel power purchase agreements (PPAs) that were signed at lower rates for a period of 25 years. As a result, electricity that was previously available at a rate of Rs 4.50 per unit will no longer be supplied. Although KSEB can approach the Supreme Court, Aptel’s ruling that the contracts were in violation of regulations indicates that there is little hope for a reversal. 

Aptel is the Appellate Tribunal for Electricity constituted in the year 2005 to hear appeals against the orders of the adjudicating officer or the Central and State Electricity Regulatory Commissions under the Electricity Act, 2003. 

Aptel upheld the Regulatory Commission’s decision, stating that KSEB’s approval of these agreements was illegal. Due to the contract cancellation, KSEB now has to procure electricity from Jhabua Power Limited and Jindal India Thermal Power Limited at higher rates. This has resulted in an additional financial burden of Rs 410 crore.

Another dispute regarding the fixed charges for power procurement from Jindal Power Limited at lower rates is pending before the Supreme Court. If new agreements are not secured, the losses are expected to increase further. Since these contracts were in severe violation of Central regulations, the companies are not supplying electricity as per the previous terms.

A look at the history

The contracts in question were signed during the tenure of the United Democratic Front (UDF) government. The Regulatory Commission had earlier rejected these contracts, deeming them illegal, leading to a power shortage in Kerala. Considering the financial losses incurred by KSEB, the state government had issued special directives to the Regulatory Commission to reinstate the agreements.

However, even after reinstatement, the power companies refused to supply electricity. They approached Aptel and secured a favourable ruling. KSEB then took the matter to the Supreme Court. The apex court did not approve the government’s decision to reinstate the contracts, and instead directed Aptel to review KSEB’s appeal. The tribunal has now dismissed this appeal, reaffirming that the contracts were legally invalid.