The Kerala State Electricity Regulatory Commission (KSERC) has approved a capital cost threshold of ₹250 crore for intra-state transmission projects to be developed through the Tariff-Based Competitive Bidding (TBCB) route. The decision was issued through an order dated December 17, 2025, and follows policy directions given by the Government of Kerala under Section 108 of the Electricity Act, 2003.
The move marks an important regulatory step for the state’s power sector, as it clearly defines when competitive bidding will become mandatory for transmission infrastructure. As per the order, any intra-state transmission project with an estimated cost exceeding ₹250 crore must now be awarded through the TBCB process, instead of the traditional cost-plus tariff method.
This regulatory change is linked to a Supreme Court judgment delivered in 2022, which directed state electricity regulatory commissions to frame proper regulations for tariff determination. Acting on this direction, KSERC amended its tariff regulations in 2023 by introducing Regulation 62A. This regulation allows the Commission to adopt tariffs discovered through a competitive bidding process, provided the state government prescribes a specific capital cost threshold for such projects.
The timing of the Kerala government’s decision is also connected to financial incentives offered by the Central Government. For the financial year 2025–26, the Ministry of Finance, through the Department of Expenditure, permitted states to avail additional borrowing of up to 0.5% of their Gross State Domestic Product (GSDP). However, this benefit was conditional upon achieving certain power sector reforms. One of the mandatory requirements was the formal prescription of a threshold limit for transmission projects to be developed through the TBCB route.
In this context, Kerala State Electricity Board Limited (KSEB Ltd.) proposed a threshold limit of ₹250 crore. The state government accepted this proposal and formally communicated it to KSERC in November 2025. Along with this, the government also directed the removal of the existing ceiling of 10 paise per unit per month on Fuel and Power Purchase Cost Adjustment (FPPCA), in line with the Electricity (Amendment) Rules, 2022.
In its final order, the Commission, chaired by T.K. Jose with Member B. Pradeep, stated that fixing the ₹250 crore threshold serves public interest and meets all statutory requirements. The Commission noted that competitive bidding would help ensure transparency, efficiency, and cost discovery in large transmission projects.
Going forward, once a project crosses the prescribed cost limit, it must follow the bidding guidelines issued by the Ministry of Power. After the successful bidder is selected, the developer will be required to approach KSERC for the grant of a transmission license and for the formal adoption of the discovered tariff. The decision is expected to promote greater competition and strengthen Kerala’s power transmission infrastructure.
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