Independence of Electricity Regulators Under Scrutiny: Kerala High Court Stays KSERC Regulations, 2025.

Introduction

The Kerala High Court on November 10, 2025, stayed the operation and implementation of the Kerala State Electricity Regulatory Commission (Renewable Energy and Related Matters) Regulations, 2025, for one month. The stay was granted by Justice Mohammed Nias C.P. in Domestic On-Grid Solar Power Prosumer Forum – Kerala and Anr. v. State of Kerala and Ors. (WP(C) No. 39797 of 2025).

Facts

The lawsuit was lodged by Domestic On-Grid Solar Power Prosumer Forum, Kerala, an organization representing domestic solar power users and its President. The allegation was that KSERC had notified the 2025 Renewable Energy Regulations on November 5 without consultation, despite court assurances that any notification would follow public hearings and consideration of any objections that might arise, two days earlier, on November 3. The petitioners accused KSERC of being an extension of KSEB, and claimed its members were either ex-KSEB officials or were politically connected to the State government. The petitioners also alleged that appointments as members of the Commission violated Section 85(5) of the 2003 Electricity Act, which provides eligibility conditions for Commission members. They also sought a separation of KSEB’s generation, transmission and distribution functions, and a CBI investigation into alleged corruption in KSERC and KSEB, particularly referring to the 2014 – 15 DBFOO power purchase agreements which had previously resulted in a Rs 6000 crore loss for consumers.

Issue

The Court’s principal issue was whether the issuance of the Kerala State Electricity Regulatory Commission (Renewable Energy and Related Matters) Regulations, 2025, violated statutory requirements for public consultation and transparency, and also whether the composition and functioning of the Commission were subjected to conflicts of interest and political influence.

Arguments

The petitioners contended that the promulgation of the Regulations was a breach of procedural fairness and infringed the Electricity Act (2003), which required consultations with stakeholders before making regulatory changes. They claimed the process was intentionally set up to erode the rooftop solar sector by privileging large utilities and stifling prosumer participation. The petitioners also charged that government was engaged in “regulatory capture” and that the Kerala State Electricity Regulatory Commission (KSERC) was being used to justify corrupt behaviour within the KSEB and to excuse policies that would be harmful to the development of renewable energy.

The respondents, however, maintained that the petition was public interest litigation (PIL) in nature and should be heard by a Division Bench. They defended the integrity of the Commission and asserted that procedures were being followed properly. The petitioners made it clear that they did not want to pursue the matter in a PIL and they case was listed again before the Single Judge.

Judgment

On November 10, 2025, the Kerala High Court temporarily halted the implementation of the Kerala State Electricity Regulatory Commission (Renewable Energy and Related Matters) Regulations, 2025, for a period of one month. Justice Mohammed Nias C.P. issued the interim order after hearing the case, noting that the KSERC had previously given the Court an assurance that it would notify the regulations only after holding a public hearing and considering objections, a procedure that was not followed prior to the notification on November 5.

The Court directed the State and KSERC to file counter-affidavits in response to the allegations made by the Petitioners, including allegations of regulatory capture, procedural fraud, and a lack of independence in the Commission. While the High Court did not reach any conclusions on the larger allegations of corruption and appointment allegation at this stage, the Court noted deviations from the procedural assurance given and statutory safeguards cannot be acceptable. The matter was directed to be heard again on December 1, 2025.

Analysis

The interim order of the Kerala High Court emphasizes the role of the judiciary in maintaining procedural propriety in regulatory processes. The Court signalled that regulatory processes must not only be within the confines of statute but must also be transparent and participatory where an enormous impact is felt by consumers and renewable energy stakeholders. The case raises an additional systemic concern regarding the independence of the KSERC, and the petitioners allege lack of autonomy stemming from appointments that have no statutory backing.

Casting an allegation of regulatory capture would be too serious for state governance in all state electricity boards in the country. Moreover, the petition’s insistence that KSEB undertake separate functions is akin to the ideas laid out in the principle of unbundling under the Electricity Act, 2003, intended to further competition and transparency.

Conclusion

The High Court’s decision to halt the Renewable Energy Regulations, 2025, serves as a timely reminder that regulatory reform, like all reform, must follow due process and maintain public confidence. As the Court considers the legality of the Regulations and the composition of KSERC, the case may establish principles to strengthen institutional independence and transparency.