Brace for higher bills: KSEB to buy power at exorbitant rates to avoid load shedding

THIRUVANANTHAPURAM: Facing an acute power crisis driven by a deficient monsoon, the Kerala State Electricity Board (KSEB) has invited tenders for short-term power purchase agreements to ensure uninterrupted supply during peak hours until December. However, the heavy financial liability of procuring electricity at exorbitant market rates is expected to be passed on to the consumers.

The state utility has approached the Kerala State Electricity Regulatory Commission seeking urgent approval for these short-term contracts. A public hearing on the matter has been scheduled for June 24.

According to KSEB's submission to the commission, immediate short-term procurement is the only viable option left, given the critically low water storage levels in the state’s hydel dams. The crisis has been further aggravated by the weak monsoon and the pressure to return power previously drawn under power-swapping agreements with other states.

To manage the current deficit, mild power restrictions of 15 to 30 minutes have already been imposed across the state until June 30. Internal assessments project a power deficit of 600 MW in July and 750 MW in August. The supply gap is expected to widen significantly between September and December, ranging between 800 MW and 1,000 MW.

High procurement rates

While KSEB floated tenders to purchase 300 MW in July, 400 MW each in August and September, and 500 MW monthly from October to December, the response from power generators indicates steep pricing:

• July Shortfall: Against the required 300 MW, power companies have offered only 150 MW, quoting a high rate of ₹10.99 per unit.
• August Sourcing: The board secured bids for 185 MW at ₹9.93 per unit and an additional 125 MW at ₹9.94 per unit.
• September Price Spike: Bids for September hit a record high, with the lowest available quote touching ₹12.98 per unit. Due to these unviable rates, KSEB is planning to issue fresh tenders for the month.
• Year-End Prospects: The pricing shows minor relief for the final quarter (October–December), where bids were received for the full 500 MW requirement at ₹9.70 per unit.