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The Kerala State Electricity Regulatory Commission (KSERC) passed an order on 06-10-2008, allowing the State power utility to charge higher tariff on each unit of power consumed by domestic consumers above a ceiling of 200 units a month. Rates will be fixed by KSERC on monthly basis depending on the average rate of purchase of power from thermal stations running on liquid fuel. Out of 75 lakhs consumers of KSEB, less than 3% consumers will be effected by this decision. It is also reported that, this restriction is intended for reduction of consumption of high-end domestic consumers than to increase the revenue of KSEB. It is also expected that a handful of consumers in this bracket will minimise the consumption to reduce their power bills.

With water level in reservoirs depleting due to the failure of south-west monsoon, state was facing severe power crisis as it was depended more on hydel projects for electricity. Overall hydel position in Kerala continues to be far below the expected average and has not improved when compared to previous years.More over Center had drastically reduced the power quota of Kerala recently. KSEB has an allocation of 1033MW during off-peak hours and 1041 MW during peak hours from the Central Generating Stations including Nuclear Stations (KAIGA &MAPS). But, the average availability from Central Generating Stations since May 2008 is about 625 to 725MW only.

Cost of liquid fuel also sky-rocketed recently. This resulted in deterioration of financial position of KSEB. 30 minutes load shedding implemented recently was not having much effect on consumption. Hence KSEB was compelled to purchase additional power from traders for around Rs.8/unit to meet the demand.Power cost of Liquid fuel station like NTPC, kayankulam and BSES, Kochi reached more than Rs.12/unit.

But Kerala State Electricity Regulatory commission directed KSEB to limit the Purchase/generation of high cost power to reduce the overall cost. KSERC instructed the Board to endeavor to take all measures for energy conservation and avoid wastage of electricity.

In view of this situation, Kerala State Electricity Regulatory commission instructed KSEB to impose 20% power cut for Low tension industrial, commercial and non-domestic  consumers. Monthly Quota will be fixed as per average consumption during last one year. If they use power above this ceiling, they will have to pay for the excess consumption tariff at the level of the average cost of power bought from liquid-fuel power stations. The power restriction of 25 per cent now applicable for high-tension and extra-high tension consumers has been brought down to 20 per cent. For new consumers, the quota will be fixed at 50 units a month for every kilowatt. Also, the Kerala Water Authority (KWA), which had pleaded for exemption from power cut, has not been exempted, Commission officials said.

The Commission order will come into effect from October 15.