The Kerala State Electricity Regulatory Commission (KSERC) has granted post-facto approval and ratified a power banking agreement between Kerala State Electricity Board Limited (KSEBL) and Madhya Pradesh Power Management Company Limited (MPPMCL). The decision was issued on September 10, 2026, following a petition filed by KSEBL seeking formal approval of the arrangement.
The agreement was entered into to address Kerala’s anticipated power shortage during the summer of 2026. KSEBL had initially attempted to procure additional short-term power through a tender on the Ministry of Power’s DEEP portal for evening supply between 18:00 hrs and 22:00 hrs. However, the tender received no bids even after extensions.
Following the unsuccessful tender process, KSEBL explored bilateral power arrangements with utilities and traders in other states. On February 12, 2026, MPPMCL offered power through the NAME OTC trading platform for supply from April 16 to May 15, 2026. The proposed supply covered time blocks between 14:00 hrs and 24:00 hrs.
Under the agreement, the electricity supplied to Kerala would be settled through physical power banking instead of monetary payments. KSEBL agreed to return 105% of the energy received during the winter period from December 16, 2026, to January 31, 2027. The return supply is scheduled during peak periods from 06:30 hrs to 10:30 hrs and 16:30 hrs to 18:30 hrs.
KSEBL accepted the proposal and issued a Letter of Intent on February 19, 2026. During the supply period, MPPMCL supplied 60 Million Units (MU) of electricity to Kerala at a daily quantum of 200 MW.
The Full Time Directors of KSEBL subsequently ratified the arrangement internally on March 18, 2026. KSEBL then approached KSERC on June 30, 2026, through Petition OP No. 40/2026, seeking post-facto approval and condonation of the procedural delay. The utility stated that the arrangement was necessary to maintain uninterrupted electricity supply during a period of tight power availability.
KSERC examined the petition under Regulation 78 of the KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2021, along with the provisions of the Electricity Act, 2003. The Commission noted that Kerala experienced exceptionally high electricity demand during April and early May 2026 due to extreme heat.
The Commission also observed that power availability on exchanges remained constrained despite ceiling rates specified by the Central Electricity Regulatory Commission (CERC). It noted that power banking arrangements can provide operational benefits during periods of high demand by enabling utilities to manage electricity requirements without immediate monetary transactions.
Based on these considerations, KSERC approved and ratified the banking arrangement between KSEBL and MPPMCL and disposed of the petition.
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