KSERC Approves Revenue Surplus For Thrissur Electricity Department After Mid-Term Performance Review

The Kerala State Electricity Regulatory Commission (KSERC) has issued its final order on the petition filed by the Thrissur Corporation Electricity Department (TCED) for its Mid-Term Performance Review and revised financial projections for the remaining years of the multi-year tariff control period. The order covers the financial years 2025-26 and 2026-27 and includes the approved Aggregate Revenue Requirement (ARR) and Expected Revenue from Charges (ERC).

TCED had projected that it would face a revenue gap of ₹880.07 lakh in 2025-26 and ₹1,136.54 lakh in 2026-27. However, after examining the financial estimates and regulatory submissions, KSERC approved a revenue surplus instead of a deficit. The Commission approved a surplus of ₹1,006.87 lakh for 2025-26 and ₹1,181.01 lakh for 2026-27.

One of the main reasons for this change was the Commission’s decision on non-tariff income. TCED had not included interest earned on its accumulated revenue surplus, stating that interest rates had declined and that part of the surplus had been used for infrastructure development. KSERC did not accept this approach and stated that the accumulated surplus remains under regulatory control and cannot be used without prior approval. The Commission recalculated the interest income using the State Bank of India’s retail term deposit rate of 6.80% and provisionally approved interest income of ₹1,059.82 lakh for 2025-26. As a result, the total approved non-tariff income increased to ₹1,336.50 lakh for 2025-26 and ₹1,351.08 lakh for 2026-27.

The Commission also reviewed TCED’s expenditure claims. It limited Operation and Maintenance (O&M) expenses, including employee costs, repair and maintenance, and administrative expenses, to the approved norms. During the public hearing, Kerala State Electricity Board Limited (KSEBL) had raised objections to the higher expenditure proposed by TCED. KSERC also rejected TCED’s proposal to include a yearly provision of ₹625 lakh for future employee salary revisions, stating that such expenses can only be approved when the actual payments are made. The Commission further disallowed the claim for electricity duty under Section 3(1), noting that the law does not permit the cost to be passed on to consumers.

On operational performance, KSERC approved projected energy sales of 1,827.98 lakh units for 2025-26 and 1,899.97 lakh units for 2026-27. However, it did not accept TCED’s proposal to increase distribution loss targets. Since distribution losses are considered a controllable factor, the Commission retained the original targets of 6.10% for 2025-26 and 6.00% for 2026-27. Based on these targets, the approved power purchase cost was fixed at ₹14,622.21 lakh for 2025-26 and ₹15,035.22 lakh for 2026-27.

KSERC also provisionally approved depreciation of ₹119.57 lakh and a Return on Net Fixed Assets of ₹65.02 lakh for both years. The Commission stated that the final approval for these amounts, along with interest on long-term loans from the Power Finance Corporation (PFC), will be decided after the final order on TCED’s separate capital investment petition. With these decisions, the Commission disposed of the petition.