Central Government's Draft NEP to Benefit KSEB but Impact Domestic Consumers in Kerala
The Central Government's draft National Electricity Policy (NEP) is poised to benefit the Kerala State Electricity Board (KSEB) but could negatively impact domestic consumers, who make up 70% of users in the state. The policy allows KSEB to adjust power tariffs with less regulatory oversight, potentially leading to significant increases for consumers as the Board seeks to recover over ₹6,000 crore in regulatory assets by April 2031. Experts recommend that KSEB enhance operational efficiency and invest in domestic power generation to mitigate costs and improve supply reliability.
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The Central Government's draft National Electricity Policy (NEP) is expected to benefit the Kerala State Electricity Board (KSEB) while adversely affecting domestic consumers, who comprise 70% of users in Kerala. The policy will limit the regulatory commissions' authority over power tariffs, allowing KSEB to recover cost variations through the Fuel and Purchase Adjustment Surcharge (FPPAS) without oversight.
KSEB's procurement practices lack transparency, leading to impulsive purchasing decisions. The Board must recover over ₹6,000 crore in regulatory assets from consumers by April 2031, necessitating a significant tariff increase post-elections.
The KSEB is urged to improve operational efficiency, reduce power procurement costs, and complete ongoing projects. A shift towards domestic power generation and investment in battery storage is also recommended to enhance power supply and reduce dependency on external transmission costs.
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