Why is Kerala opposing the new Electricity Rules?
Why in News?
- The Kerala government has raised its objections over the provisions of the Electricity (Amendment) Rules, 2022.
Electricity (Amendment) Rules, 2022:
- The Union Ministry of Power issued the gazette notification on the Electricity (Amendment) Rules, 2022 on 27th December 2022.
- The Electricity (Amendment) Rules, 2022 aims to amend the Electricity Rules of 2005.
- The key amendments in the Rules include:
- Inclusion of surcharge payable by consumers seeking open access
- Timely recovery of power purchase costs by the distribution licensee
- Implementation of Uniform Renewable Energy Tariff for the central pool
- Rule 14 required the state electricity regulatory commissions to specify a price adjustment formula for automatically passing on the costs through the consumer tariff on a monthly basis.
- According to the new Rules, the fuel and power purchase adjustment surcharges would be calculated and charged to the consumers, automatically, without the need for going through the regulatory approval process, on a monthly basis based on the formula specified by the state electricity regulatory commissions.
Kerala Government’s stand:
- The Kerala Government has raised concerns over Rule 14 which allows distribution companies (Discoms) to automatically recover the expenses arising out of variations in fuel price and power purchase costs from the consumers, on a monthly basis.
- According to the Kerala Government, the freedom extended to Discoms to automatically charge the costs through the electricity bill is detrimental to the interests of the consumer.
- The state government opines that the consumers would be subjected to unfair frequent price fluctuations.
- Kerala Government has also said that the crucial role played by the State Electricity Commissions in fixing the surcharge would get diluted due to the implementation of the new Rules.
The role of a regulator:
- Until the introduction of the new Rules, the Kerala State Electricity Board (KSEB) used to file pleas before the Kerala State Electricity Regulatory Commission on a quarterly basis in order to collect the thermal fuel surcharge.
- As Kerala produces only about 30% of its electricity demand within the state, the power purchase expenditure particularly during the summer months would usually be high.
- The Kerala State Electricity Regulatory Commission then used to decide on the KSEB’s pleas through public hearings.
- The Kerala government believes that diluting such a procedure would also dilute the existing prudent check and would make the general public bear the burden.
- The Electricity Minister of Kerala has said that his department will be seeking legal opinion in order to enforce the rules in such a way that the consumers are not burdened.
- The Minister has instructed the Power Department to check if the potential tariff fluctuations caused due to the new rules can be balanced by reducing tariffs during the extended monsoon months in the state when power purchase levels are on the lower side due to higher power generation in the form of hydroelectricity.
- The Minister further has recommended keeping the power purchase costs minimal in the remaining months to prevent burdening the consumers.
- However, experts feel that such safeguards would only work in cases where a State-run entity such as the KSEB is in power and believe that the real concern arises when private players take up electricity distribution.