Thiruvananthapuram – In a significant setback for the Kerala State Electricity Board (KSEB), the Appellate Tribunal for Electricity (Aptel) has dismissed its appeal against the Regulatory Commission’s decision to cancel long-term Power Purchase Agreements (PPAs) that were signed at lower electricity rates. This means that Kerala will no longer receive electricity at the previously agreed rate of Rs 4.50 per unit. With limited legal options remaining, KSEB may still approach the Supreme Court, but Aptel’s ruling indicates that a reversal of this decision is unlikely.
Legal and Financial Implications
Aptel, established under the Electricity Act, 2003, to hear disputes related to electricity regulations, upheld the Regulatory Commission’s stance that KSEB’s approval of these agreements violated central electricity regulations. Consequently, KSEB is now compelled to procure electricity from Jhabua Power Limited and Jindal India Thermal Power Limited at significantly higher rates. This shift has resulted in an additional financial burden of Rs 410 crore on Kerala’s power sector.
In a separate but related dispute, fixed charges for power procurement from Jindal Power Limited at lower rates remain under review in the Supreme Court. If new cost-effective agreements are not secured, Kerala’s financial losses are expected to rise further, worsening the state’s power crisis.
Background: Controversial Power Contracts
The disputed power contracts were signed during the United Democratic Front (UDF) government’s tenure. The Regulatory Commission had earlier deemed these agreements illegal, leading to a significant power shortage in Kerala. To mitigate financial losses, the state government issued special directives to reinstate the agreements.
However, despite these efforts, the power companies refused to supply electricity under the original terms. They challenged the reinstatement in Aptel and secured a favorable ruling. In response, KSEB appealed to the Supreme Court, which refused to approve the state government’s decision to reinstate the contracts. Instead, the apex court directed Aptel to review KSEB’s appeal, leading to the recent dismissal of the case.
With this decision, Kerala faces the challenge of securing new power agreements at affordable rates. The state’s rising electricity costs could have long-term financial consequences, affecting both government expenditures and consumer tariffs.
