Regulatory Commission rejects KSEB's request to increase fuel cess by 17 paise per unit

THIRUVANANTHAPURAM: Following the recent implementation of a 16 paise per unit hike in electricity tariff, the Kerala State Electricity Board (KSEB)'s request to further increase the charge by 17 paise per unit under the fuel cess category has been rejected by the State Electricity Regulatory Commission. This decision was made during a public hearing held yesterday, presided over by Commission Chairman TK Jose. The electricity tariff in the state was last increased on December 5.

Currently, 20 paise per unit is being collected as fuel cess. Including this, consumers are already paying an additional 36 paise per unit from this month. The rejected application sought permission to impose an additional 17 paise per unit for a period of three months.

In addition to power purchase agreements, the Kerala State Electricity Board (KSEB) is often forced to purchase electricity from the open market at high rates to meet the electricity deficit during the peak hours of consumption. This typically occurs between 6 PM and 10 PM. The average cost of electricity per unit ranges from Rs 5 to Rs 8, but during peak hours, it can rise to Rs 12 to Rs 15 per unit.

According to the Central Electricity Act, KSEB can recover losses by adding a fuel cess to consumer bills. However, the cess is capped at 10 paise per unit in Kerala, and any increase requires the Regulatory Commission's approval. Currently, consumers pay a total cess of 20 paise per unit, comprising 10 paise levied by KSEB and an additional 10 paise approved by the Commission.

Mistake in KSEB's stance?
From April to August this year, KSEB incurred an additional expenditure of Rs 111.15 crore for purchasing electricity from external sources. So far, it has recovered Rs 62.09 crore by charging 10 paise per unit. To recover the remaining Rs 49.06 crore, KSEB had requested permission to impose an additional charge of 17 paise per unit. This request was rejected by the Commission.

As per the regulations approved by the Commission, the fuel cess must be calculated once every three months. Recovering the additional costs incurred over a five-month period (April to August) in one go would impose an excessive burden on consumers. Taking this into account, the Commission directed KSEB to submit a fresh application calculating the additional losses for three months. Based on this calculation, the cess would amount to less than 10 paise per unit, as clarified by the Commission.