Thiruvananthapuram: Kerala State Electricity Regulatory Commission (KSERC) on Friday approved an average power tariff hike of 16 paise, an increase of 2.39%. This is less than half the hike of 37 paise sought by KSEB Limited in August this year.

The hike is applicable for the remaining 2024-25 fiscal. For the coming 2025-26 fiscal, there will be a tariff hike of 12 paise, a 1.75% hike over the increase effected for the remaining 2024-25 fiscal. In effect, the KSERC has approved two tariff revisions in one go; one for the remaining 2024-25 fiscal and the other for the 2025-26 fiscal. The KSERC, however, rejected a hike in tariff for the 2026-27 fiscal.

The revised tariffs have become operational from December 5, Thursday. 

No 'summer tariff'
The Regulatory Commission also shot down the 'summer tariff' demand raised by the KSEB. The power untility wanted a 10 paise hike for five months from January to May till 2026-27 to make up for the increasing power purchase costs during summer. The KSEB wanted this 'summer tariff' as an additional layer above the hike already sought. The power utility hoped to mop up Rs 111 crore annually from 'summer tariffs'.  

(This August, KSEB had sought an average increase of 30 paise for the remaining 2024-25 fiscal, nearly 20 paise for 2025-26, and 2 paise for 2026-27. And all of this in addition to the 10 paise summer tariff.  KSEB expected to mobilise an additional Rs 3544.4 crore over a period of three years but the KSERC has approved an additional mobilisation of only Rs 1834.43 crore.) 

Soft on poor and middle class 
As usual, BPL households (those consuming below 40 units a month) have been spared; these households will continue to receive free power. KSEB, too, has not asked for any change.

Nearly 90% (89.91%) of the total one crore seven lakh thirty six thousand two hundred and forty nine (1,07,36,249) power consumers in Kerala belong to the lowest four slabs of consumption: 0-50, 51-100, 101-150, and 151-200 units. For these groups, the average effective increase in tariff will be less than 10 paise per unit; KSEB had sought a near 15 paise increase for these groups alone.

There will be a modest increase in their fixed charges, too. For single-phase users of these four slabs, the average monthly increase in fixed charges will be Rs 8.75; Rs 5 for the lowest slab (0-50) and Rs 10 for the remaining three slabs. For three-phase users in these groups, the monthly increase would be Rs 20 a month for all users in the slabs from 0-50 to 151-200.

Shock for the well off
However, for higher consumption slabs, or those consuming more than 250 units a month, the new tariffs are higher than what even the KSEB has asked for. 

For instance, the KSERC has approved a tariff of Rs 7.60 per unit for households consuming up to 350 units. KSEB had asked for only Rs 7.55 per unit. For those consuming up to 500 units, KSEB wanted a higher tariff of Rs 8.20 per unit. The KSERC went a step ahead and fixed it at Rs 8.25. For those consuming over 500 units, KSEB had sought a revised tariff of Rs 9.10 per unit. But the new tariff is Rs 9.20.  

Fact is, less than 5%, or four lakh ninety six thousand one hundred and thirty three (4,96,133), of the total consumers in Kerala consume more than 250 units a month. Their monthly fixed charges have also gone up by Rs 5 to Rs 30.

Telescopic and non-telescopic charges
Once a household consumes more than 250 units a month, non-telescopic charges kick in. This means that each unit consumed will be billed at the same cost per unit. 

Take for instance a household consuming 252 units a month. Non-telescopic charge for the 0-300 slab, Rs 6.55 per unit, kicks in. The bill (excluding the fixed charges) will add up to Rs 1650.60 (6.55 x 252). 

Now take a household consuming 249 units a month. Here telescopic charges apply. Meaning, every unit consumed is not charged at the same rate but at differential rates. So even though the per unit cost of the 201-250 slab is Rs 8.35, the bill (excluding the fixed charge) will not swell to Rs 2079.15 (249 x 8.35). 

Instead, the bill is calculated in an incremental fashion, each 50 units billed at the rate of the cost fixed for lower slabs. For the first 50 units, it will be Rs 3.30, the rate for the 0-50 slab: Rs 165. The next 50 units will be billed at Rs 4.15: Rs 207.50. The next 50 will be charged at Rs 5.25: Rs 262.50. The next 50 at Rs 7.10: Rs 355. And the remaining 49 units at Rs 8.35, the cost of the 201-250 slab: Rs 409.15. This way, the total bill, excluding fixed charges, will be Rs 1399.15, and not Rs 2079.15 under the non-telescopic billing. 

And this (Rs 1399) will be at least Rs 250 less than a household that had consumed just three units more (Rs 1650). More than 95% of consumers fall under telescopic billing.