Why is Kerala opposing the new Electricity Rules?

Source– The post is based on the article “Why is Kerala opposing the new Electricity Rules?” published in The Hindu on 17th January 2023.

Syllabus: GS3- Infrastructure: Energy

Relevance– Issues related to electricity sector

News– The article explains the recently released gazette notification on the Electricity (Amendment) Rules, 2022.

Kerala had fiercely objected to Rule 14.

What are the new rules?

The Centre introduced the Electricity (Amendment) Rules, 2022, to amend the Electricity Rules, 2005.

Rule 14 of the Rules requires the State electricity regulatory commission to specify a price adjustment formula. It will automatically pass on the costs through the consumer tariff on a monthly basis. It will be done without going through the regulatory approval process.

What has been Kerala’s stand?

It has argued that giving Discoms the freedom to automatically pass on the costs through the electricity bill endangers consumer interests.

The amendment will lead to an unstable pricing situation in the power sector, akin to that of petrol and diesel prices. Consumers would be subjected to frequent price fluctuations.

The crucial role played by the State Electricity Commission in fixing the surcharge would get diluted.

What is the role of the regulator?

Until now, KSEB filed a petition for collecting the thermal fuel surcharge from the Kerala State Electricity Regulatory Commission on a quarterly basis.

Kerala produces only 30% of its electricity demand within its borders. The power purchase expenditure, especially during the summer months is quite substantial because of increasing demand.

In the normal course of things, the Commission finalises a decision on the KSEB plea after holding a public hearing. According to the State government, doing away with this prudence check would impact the general public.

 

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