Kerala’s Revised Electricity Tariff: A Step Towards Sustainability And Social Inclusion

Introduction

The Kerala State Electricity Regulatory Commission (KSERC) issued a revised electricity tariff schedule with the aim of promoting sustainable energy practices and supporting vulnerable sections of society.[1] This new tariff, effective from December 5, 2024, introduces several key changes, including the implementation of Time of Day (ToD) billing, revised charges for different consumer categories, and measures to encourage energy efficiency.

Explanation

• Promoting Solar Energy:
  • Time-of-Day (ToD) Billing: The ToD system, applicable to specific industrial and high-consumption domestic consumers (those consuming more than 250 units per month), charges higher rates during peak hours (typically between 6 PM and 10 PM). This incentivizes consumers to shift their electricity usage to off-peak hours when demand is lower, reducing the strain on the grid and potentially lowering overall energy costs.
  • Indirect Support for Solar: While the tariff itself does not directly subsidize solar installations, the ToD system creates a strong financial incentive for consumers to explore renewable energy options. By installing solar panels, consumers can generate a significant portion of their daytime energy needs, thereby reducing their reliance on grid electricity during peak hours and lowering their overall electricity bills.
• Supporting Vulnerable Groups: The revised tariff provides significant relief to several vulnerable sections of society, including:
  • Below Poverty Line (BPL) families: BPL families with a connected load of 1000 watts or less and monthly consumption below 40 units are completely exempt from all charges.
  • BPL families with special needs: BPL families with a cancer patient or a family member with a permanent disability exceeding 40% and consuming up to 100 units per month with a connected load of 2000 watts or less are charged a concessional rate of Rs 1.50 per unit.
  • Endosulfan victims: Families of victims of the endosulfan tragedy in Kasaragod district who consume up to 150 units per month receive a subsidized rate of Rs 1.50 per unit.
  • Domestic water supply schemes: Domestic water supply schemes run by government agencies or local authorities are billed under the domestic tariff, reducing their operational costs and making access to clean water more affordable for communities.
• Other Key Changes:
  • Fixed Charges and Demand Charges: The introduction of fixed charges and demand charges for all categories may impact consumers who were previously only charged for energy consumption. Fixed charges are a fixed amount payable regardless of energy consumption, while demand charges are based on the maximum power drawn by the consumer during a billing period. These charges aim to ensure that consumers contribute to the maintenance and upkeep of the electricity grid.
  • Power Factor Improvement: The tariff emphasizes the importance of power factor improvement, which refers to the efficiency of electrical power utilization. It mandates the installation of Static Capacitors for specific consumer categories, such as industrial consumers. These capacitors improve power factor, reducing energy losses and improving grid stability. Consumers who fail to comply with this requirement face higher energy charges.
  • Optional Demand Based Tariff: An Optional Demand Based Tariff is available for consumers with higher connected loads (exceeding 20 kW), excluding those already under ToD billing. This allows them to potentially reduce their electricity bills by optimizing their load usage and minimizing peak demand.
  • Clarified Billing for Specific Establishments: The tariff clarifies the billing process for various establishments like homestays, farm stays, limited-use auditoriums, and other commercial entities, providing greater clarity and transparency in their electricity charges.

Conclusion

The revised electricity tariff in Kerala represents a multi-faceted approach to energy policy. By encouraging the adoption of solar power through the ToD system, providing targeted support to vulnerable groups, and promoting energy efficiency through measures like power factor improvement, the KSERC aims to create a more sustainable and equitable electricity system. While the impact of these changes will need to be evaluated over time, the revised tariff framework demonstrates a commitment to both environmental sustainability and social inclusion.

[1] https://dev.erckerala.org/api/storage/orders/vnp1XnN5z47r0dCh18rj3s2e1q2utii3T8AtwUMm.pdf