The Kerala State Electricity Regulatory Commission issued an order on December 17, 2025, setting a clear threshold limit for intra-state transmission projects that must be developed through the Tariff-Based Competitive Bidding route. The decision follows a policy direction from the Government of Kerala and is aimed at aligning the state’s power sector framework with national guidelines while also enabling Kerala to access additional fiscal benefits linked to power sector reforms.
The order comes in the backdrop of a wider regulatory and legal context. A key trigger for this move was a judgment passed by the Hon’ble Supreme Court in November 2022. In that judgment, the court directed electricity regulatory commissions across the country to clearly prescribe the terms and conditions for tariff determination. The court emphasized the need for regulatory clarity and uniformity, especially in matters related to tariff setting for power infrastructure projects.
In response to the Supreme Court’s direction, the Kerala State Electricity Regulatory Commission amended its regulations in 2023. These updated regulations included provisions that allow the Commission to adopt tariffs discovered through competitive bidding processes. However, such adoption is conditional on the bidding being conducted in a transparent manner and in accordance with the guidelines issued by the Central Government. The latest order builds on these regulatory changes and gives them a clear operational framework for intra-state transmission projects.
Another major reason behind the Commission’s decision is linked to the state’s financial planning and borrowing capacity. The Ministry of Finance, Government of India, has permitted states to avail additional borrowing of up to 0.5 percent of their Gross State Domestic Product, subject to certain performance-related conditions in the power sector. One of the mandatory conditions specified by the Ministry is that states must prescribe a threshold limit for transmission projects that are to be developed through the tariff-based Competitive Bidding route. By issuing this order, Kerala has met this specific requirement, thereby becoming eligible to access the additional borrowing facility.
The threshold limit of ₹250 crore was proposed by the Kerala State Electricity Board Limited. Based on this proposal, the Government of Kerala issued a policy directive under Section 108 of the Electricity Act, 2003. The Commission examined this directive and observed that prescribing such a threshold limit falls within the scope of public interest and state policy. It also noted that the directive satisfies all statutory requirements under the Electricity Act.
As per the order, all intra-state transmission projects in Kerala with an estimated capital cost exceeding ₹250 crore will now have to be developed through the Tariff-Based Competitive Bidding route. These projects must strictly follow the competitive bidding guidelines issued by the Ministry of Power, Government of India. The order also clarifies that after the bidding process is completed, the successful bidders must approach the Commission for the grant of a transmission license and for the formal adoption of the tariff discovered through the bidding process.
Through this order, the Kerala State Electricity Regulatory Commission has provided regulatory certainty for large intra-state transmission projects. The move is expected to promote transparency, competition, and efficiency in project development while also supporting the state’s broader financial and policy objectives.
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