Kerala electricity regulatory commission seeks measures to reduce KSEB's soaring power purchase spending

The Kerala State Electricity Regulatory Commission has directed the Kerala State Electricity Board (KSEB) to put in place measures to cut down its burgeoning power purchase expenses.

Among the recommended measures are preparing a “realistic” month-wise forecast on energy demand and peak demand for 10 years from 2024-25 to 2033-34, and creating a “core committee” at the corporate level for optimal benefits from power generation and purchases.

The recommendations are part of a 225-page order of the commission on the “truing-up” (balancing) of accounts of the KSEB for the 2022-23 fiscal. “(The) cost of power purchase contributes more than 55% of the total cost of KSEB. Hence the licensee shall give due importance for optimisation of its cost of power purchase and to reduce the expenses,” it noted.

In preparing the 10-year forecast, the KSEB has been asked to submit proposals for meeting the projected power requirement from various sources, including internal generation within Kerala, renewable energy sources, long, medium and short term purchases, term-ahead, day-ahead and the real-time markets on the energy exchanges.

The commission also wants the KSEB to “estimate the ‘month-wise’ and ‘annual’ power purchase cost for each year from 2024-25 to 2033-34, under ‘normal’, ‘optimistic’ and ‘pessimistic’ monsoon scenarios.”

Procurements under longer-duration contracts need to be based on a ‘comprehensive framework’ covering the quantum, period and ceiling price that are decided well in advance, the commission said.

In addition to these, the commission has also sought details of the quantum of roof-top solar power likely to be added to the capacity by 2026-27.

Kerala is heavily dependent on supply from central generating stations and market purchases to meet its growing electricity demand, as internal generation meets roughly 30% of it. For instance, in 2023-24, internal generation stood at 6,504.28 million units (mu), while supply from CGS and long, medium and short-term contracts accounted for 23,923 mu at an average cost of ₹4.96 per unit. In addition to this, the KSEB spent an additional ₹2119.85 crore on procuring 3641.7 mu to meet the additional demand in that fiscal, show data with the State Legislative Assembly.