KERC Approves New 2026 Regulations For Transmission Licenses Through Competitive Bidding In Karnataka

The Karnataka Electricity Regulatory Commission (KERC) has approved the KERC Regulations, 2026, creating a new framework for granting transmission licenses to intra-state transmission projects selected through Tariff-Based Competitive Bidding (TBCB). The regulations were notified on May 21, 2026, and came into force on May 29, 2026, following their publication in the Official Gazette.

The new regulations were introduced as part of the Karnataka Government’s efforts to develop intra-state transmission projects through a competitive bidding process. Under guidelines issued by the Ministry of Power, Karnataka Power Transmission Corporation Limited (KPTCL) has been authorized to appoint Bid Process Coordinators, such as REC Power Development and Consultancy Limited (RECPDCL) or PFC Consulting Limited (PFCCL), to manage the bidding process for these projects.

KERC noted that the existing licensing regulations issued in 2004 did not contain specific provisions for transmission projects awarded through competitive bidding. As a result, the Commission drafted a separate set of regulations to address the requirements of the TBCB framework. Public comments and suggestions were invited in April 2026, and a public hearing was conducted on April 30 before the regulations were finalized.

According to the new rules, only entities selected under the competitive bidding guidelines issued by the Central Government will be eligible to apply for a transmission license. Applicants are required to submit their applications through KERC’s e-filing portal. They must also upload all relevant documents on their company websites and publish public notices in both English and Kannada newspapers within three days of filing the application.

The regulations also assign responsibilities to the State Transmission Utility (STU), which must provide its recommendations on the project to KERC within a period of 10 to 20 days.

One of the key changes introduced by the regulations relates to the fee structure. KERC has fixed the annual license fee for other transmission licensees at Rs. 20 lakh per annum. This replaces the earlier system under which licensees paid Rs. 1 lakh per MW, subject to a maximum limit of Rs. 20 lakh. In addition, a fee of Rs. 25 lakh will now be applicable for applications seeking adoption of transmission tariffs under Section 63 of the Electricity Act.

The regulations provide that a transmission license will remain valid for 25 years from the date of issuance. Licensees wishing to continue operations beyond this period must apply for renewal at least two years before the license expires.

Transmission licensees are required to construct, operate, and maintain their assets efficiently and economically. They must maintain adequate insurance coverage, provide non-discriminatory access to the transmission network, and are prohibited from engaging in electricity trading activities. Separate audited accounts must also be maintained for each business activity.

KERC has the authority to amend or revoke licenses in cases involving defaults, insolvency, or non-compliance with contractual obligations. However, any revocation must follow an official inquiry, observe principles of natural justice, and include a three-month notice period. In cases of debt default, lenders may nominate another entity to take over the license, subject to Commission approval. Any disputes arising under the regulations must first be resolved through mutual discussions, failing which they will be referred to KERC for final adjudication.