KERC Drafts New Fee Regulations 2024 To Address Rising Operational Costs And Enhance Regulatory Efficiency

The Karnataka Electricity Regulatory Commission (KERC) recently announced a draft for new Fee Regulations, 2024, in response to increased operational costs. Since the original Fee Regulations of 2016, inflation and other factors have significantly raised the Commission’s expenses, prompting a need for fee revisions to support various essential functions, including licensing, tariff determination, dispute resolution, and other regulatory duties. The updated regulations include a revised fee structure to better align with the Commission’s financial requirements.

Under the new draft regulations, various applications, petitions, and licenses require updated fees. For example, an annual license fee for transmission utilities will now be ₹20,00,000, while smaller licensees pay based on their capacity, up to a maximum of Rs. 20 lakhs. Distribution licensees outside of rural co-operatives will similarly pay an annual fee of ₹20,00,000, while rural co-operatives and SEZs (Special Economic Zones) will pay ₹3,00,000 annually. Additionally, electricity traders are also subject to fees specified under separate KERC regulations.

Fee payments are specified according to different activities. For instance, applications for tariff determinations and petitions for amendments to licenses carry their specific fee amounts. Further adjustments account for late payments, where penalties may apply based on the amount due. The Commission accepts payments via bank drafts, bankers’ cheques, and electronic methods such as RTGS or NEFT for amounts exceeding ₹25,000. These modernized options aim to streamline payment processes for applicants.

The draft also establishes guidelines on fees for additional services such as reviews, disputes, and approvals. The fee for tariff determination for generating companies depends on capacity, set at ₹7,500 per MW for conventional plants, while renewable energy plants are charged ₹3,000 per MW, with a minimum application fee of ₹25,000. For cases that involve disputes with monetary claims, fees are calculated as 1% of the claim amount, subject to a minimum of ₹50,000. For reviews of Commission orders, licensees and generating companies must pay ₹25,000, while other parties are charged ₹10,000.

To balance fairness with financial sustainability, the regulations provide scenarios for partial fee refunds. For instance, if a dispute is resolved before a hearing begins or a petition is withdrawn before admission, KERC may refund 50% of the fee. This approach aims to incentivize early resolution while maintaining financial support for the Commission’s activities.

Stakeholders, including licensees, companies, and the general public, are encouraged to review and comment on these proposed changes. The draft regulations are open to feedback for 15 days after publication in the Karnataka Gazette, after which KERC will finalize the document. The Commission retains the authority to modify the regulations as needed in the future, ensuring they remain relevant to changing circumstances.

Through these updates, KERC aims to enhance operational efficiency while adjusting to economic realities. The revised fees reflect both the Commission’s expanded duties under the Electricity Act of 2003 and the increasing costs associated with maintaining a sustainable regulatory framework in Karnataka’s electricity sector.