No power cuts, but will consumers pay more? Kerala seeks costly power from Himachal

THIRUVANANTHAPURAM: Kerala is seeking to extend its power purchase agreement with Himachal Pradesh until May to avoid power cuts amid the ongoing energy crisis. The Kerala State Electricity Board (KSEB) currently has a contract to purchase 900 MW of power from Himachal Pradesh at Rs 14.50 per unit until October 31. The board has begun efforts to extend the agreement until May at a lower rate of Rs 12-13 per unit. Himachal Pradesh may be willing to negotiate the price if the agreement is extended for a longer period.

Peak power consumption in the state is currently below 5,000 MW and stood at 4,954 MW recently. With the Himachal power supply available, Kerala may be able to avoid power cuts even if peak demand rises to around 5,200 MW.
The state government has backed the KSEB's efforts to continue the agreement with Himachal Pradesh. The regulatory commission has not permitted the KSEB to purchase power at rates above Rs 10 per unit. However, with the government's support, the board is proceeding with further steps to secure the additional power.

More short-term agreements

The KSEB will soon invite tenders for additional short-term power purchase agreements to meet the state's electricity demand during the summer. The tenders will be floated for the additional power required after the Himachal agreement.
The KSEB will also approach the regulatory commission seeking permission to purchase power at lower rates during the early morning and morning hours until December. The power will be purchased during these periods to limit hydropower generation.

Higher costs may burden consumers

Purchasing electricity at higher rates to avoid power cuts could eventually burden consumers through a surcharge or an increase in electricity tariffs. The additional cost would have to be borne by the government if consumers are to be protected from the impact. In previous years, the government has borne KSEB's losses at various stages.