In a significant development, the Appellate Tribunal for Electricity (APTEL) in New Delhi has ruled that the four long-term contracts by the Kerala State Electricity Board (KSEB) to purchase 465 megawatts of power at a lower price cannot be restored.
This decision comes in as a major setback for both the state government and the KSEB. The ruling implies that consumers will have to bear the burden of the state purchasing power at higher costs. The state government is likely to appeal the order in the Supreme Court.
In 2014, the KSEB had finalised contracts with Jhabua Power (two contracts of 115 and 100 mw each) and Jindal India Thermal Power (100 mw) for a 25-year period starting in 2016. Although KSEB continued to purchase electricity under these contracts until 2023, an inquiry by the Electricity Regulatory Commission, based on a complaint, found that the procedures for these contracts violated the tender guidelines of the Union Power Ministry. Consequently, the Commission ordered the cancellation of these contracts.
Following a request by the state cabinet, the Commission reconsidered the issue and restored the contracts by December 2023. APTEL's recent order is in response to a petition filed by Jhabua Power against this decision.
All companies, except Jindal India Thermal Power, informed KSEB that the Commission's ruling could not be approved and that power could not be distributed at the rates specified in the original contracts. Jindal Power, on the other hand, agreed to continue supplying 150 mw, but the indecision over payment of its dues by KSEB posed a barrier in taking this agreement forward.
Double price in summer
During the previous summer season from March to May, when power consumption in the state hit record highs, Kerala felt the impact of cancelling those contracts, which stipulated purchasing power at lower prices. Although KSEB invited short-term contracts to address the crisis, none of them materialised in view of the conditions set by power distribution companies.
These companies had set a price of Rs 9.59-10.25 per unit for receiving electricity throughout the day and Rs 14.3 per unit for the peak period. A subsequent move by KSEB to invite tenders for each month and sign short-term contracts also triggered controversy.
