Thiruvananthapuram: The Kerala Cabinet on Wednesday decided to officially ask the Kerala State Electricity Regulatory Commission to withdraw its May 10 order that scrapped Kerala State Electricity Board's (KSEB) four long-term power purchase agreements worth 465 MW with private producers.
Top sources said that the government would invoke its powers under Section 108 of the Electricity Act to give such a direction to the KSERC. Section 108 states that in matters of policy involving public interest, the State Regulatory Commissions are bound by the directions of the state.
The supply deals, struck in 2014 when the UDF was in power, allowed KSEB to import 465 MW power at a price ot more than Rs 4.29 per unit for 25 years. While invalidating them, the KSERC said that the tariff determination was done in an unfair, non-transparent and inequitable manner and that KSEB had "grossly deviated" from the guidelines issued by the Ministry of Power.
The Commission had said that the additional liability as a consequence of these faulty deals would have been to the tune of nearly Rs 6,000 crore in 25 years.
Soon after the order, an extended summer pushed Kerala into a severe power crisis. Right in the middle of the monsoon season, the water level in dams plummeted to nearly 35 percent when during a normal season the dams would be 80 percent full. The peak hour demand in the middle of August challenged the peak hour demand of summer months like March and April.
Considering the situation, the KSERC had no choice but to allow the "illegal" power supply deals to continue till December this year. However, the private producers that were affected by the order became stingy, forcing the KSEB to purchase costly power from outside at a prohibitive Rs 10 per unit to make up for the shortage.
Here are the four disputed power supply deals: 115 MW of power from Jhabua Power Ltd (Rs 4.15 per unit); 150 MW of power from Jindal Power Ltd (Rs 4.29 per unit); 100 MW of power from Jindal India Thermal Power Ltd (Rs 4.29 per unit); and four, 100 MW of power from Jhabua Power Ltd (Rs 4.29 per unit).
As an emergency measure, in the first week of September, KSEB had entered into short term supply deals for 350 MW till November this year. It could secure power but at prices higher than it had anticipated; Rs 7.6, Rs 7.87 and Rs 6.95. the KSEB had also entered into medium-term five-year agreements for 403 MW, but at Rs 6.88 per unit.
Had the deals not been scrapped, the same amount of power could have been secured for Rs 4.29 per unit. Hence, the government move to instruct the KSERC to roll back its May 10 order.
It is not unprecedented to invoke Section 108. In 2016, for instance, the government had invoked the section to direct the KSERC to rework the Supply Code, 2014, to simplify the application forms and procedures to speed up the grant of electricity connections.
