Kerala State Electricity Regulatory Commission Cuts KSEBL Revenue Gap Claim In FY25 Truing-Up Order

The Kerala State Electricity Regulatory Commission (KSERC) has issued its final order on the true-up of accounts for the financial year 2024-25 of Kerala State Electricity Board Limited. The order reviewed the actual financial performance of the utility and compared it with earlier approved estimates to determine the final expenses and revenue that can be recovered from electricity consumers in the state.

According to the filing submitted by KSEBL, the utility reported a total revenue gap of ₹1,053.79 crore for FY 2024-25. The company attributed the shortfall mainly to higher operational costs and rising power purchase expenses. However, after examining the petition in detail and conducting public hearings with stakeholders and consumer groups, the Commission approved only ₹313.53 crore as the provisional revenue gap. Following this approval, the cumulative unbridged revenue gap of KSEBL has now increased to ₹6,958.83 crore as of April 1, 2025.

One of the major reasons for the sharp reduction in the approved amount was the Commission’s strict approach toward power purchase costs, depreciation claims, and operational expenses. KSEBL had reported a total power purchase expense of ₹12,930.60 crore. However, KSERC disallowed several expenses that it considered non-prudent in order to protect consumer interests.

The Commission also rejected KSEBL’s claims for depreciation on revalued assets and on assets created through consumer contributions and government grants. As a result, KSERC approved depreciation of only ₹826.94 crore compared to the ₹2,098.84 crore shown in the utility’s corporate accounts. Similarly, employee pay revision expenses came under scrutiny. The Commission clarified that such expenses would only be approved on the basis of actual payments and after receiving proper authorization from the state government.

Apart from financial issues, the truing-up process also revealed major structural and accounting weaknesses within KSEBL. Independent statutory auditors appointed by the Comptroller and Auditor General (C&AG) issued an adverse opinion on the utility’s accounts. The auditors observed that KSEBL failed to produce proper title deeds for its land assets and lacked an effective system to identify and retire damaged or abandoned assets. The utility was also unable to properly reconcile its bank accounts.

These shortcomings have already affected KSEBL’s financial standing. Due to the poor financial and accounting practices, the Ministry of Power imposed a 15-mark disincentive on the utility in its Integrated Rating of Power Utilities. This has weakened KSEBL’s financial credibility and may affect its ability to secure loans at lower interest rates in the future.

Consumer associations also raised concerns over operational inefficiencies within the utility. Stakeholders pointed to heavy water spillage from low-capacity reservoirs during the monsoon season, resulting in wastage of low-cost hydroelectric power and increased dependence on expensive thermal power. Higher auxiliary power consumption at several hydel stations was also highlighted. Taking note of these issues, the Commission directed KSEBL management, especially the Director of Finance, to resolve the long-pending asset tracking and accounting problems through software upgrades within a fixed timeline.