Kochi: The Kerala state government is considering a significant change in its electricity procurement strategy, with plans to involve broker companies in the process. This move has sparked high-level discussions within the Kerala State Electricity Board (KSEB) and could have implications for the state’s power management and consumer electricity costs.
The proposal suggests assigning electricity procurement responsibilities to Vidyut Vyapar Nigam Limited (VVNL), a subsidiary of the National Thermal Power Corporation (NTPC). VVNL, a central public sector entity based in Noida, specializes in power trading. The state aims to finalize this transition before the end of the current Left government’s tenure.
Kerala’s Dependence on External Power Sources
Currently, Kerala relies on external sources for 70% of its electricity. To address nighttime power shortages, the state frequently purchases electricity from power exchanges. The System Operations Division in Kalamassery currently manages these purchases, but under the new plan, this responsibility would shift to VVNL.
Concerns Raised by Engineers
During an online meeting, engineers from the System Operations Division strongly opposed the broker model, citing concerns over increased costs and reduced state control. Under the Electricity Act of 2003, electricity transmission is typically managed by state governments or electricity boards, making the proposed change unprecedented.
Higher Costs for Consumers
The introduction of broker companies could increase electricity costs for consumers. Trading margins are expected to range from 5 to 10 paise per unit, with last year’s electricity purchases projected to cost the state an additional Rs 43.57 crore in commission and Rs 15 crore in consultancy fees. These costs, totaling Rs 58.57 crore, are likely to be passed on to consumers, resulting in higher electricity bills.
If implemented, this shift could significantly impact the state’s energy sector, raising concerns over affordability and governance in electricity procurement.
