Kerala State Commission Turns Down KSEB Petition For Gross Metering, Net Billing

In an important order last week, the Kerala Electricity Regulatory Commission (KSERC) has turned down the plea of the state discom, Kerala State Electricity Board Ltd (KSEB) for modification of the net metering rules as applicable in the state to  gross metering and a net billing regime. KSEB had also made a plea for the settlement of excess energy at the average pooled power purchase cost, which was also roundly rejected. The decision comes as a relief for both existing and potential  solar consumers or prosumers, as a shift to gross metering or even net billing would have made solar projects completely unviable. 

KSEB, in it’s petition, had asked for

• Introduction of Gross Metering /Net Billing schemes in the State
• Settlement of excess energy at Average Pooled Power Purchase Cost

Issue No.1: Introduction of ‘Gross Metering/Net Billing Schemes in the State

In their petition, KSEB Ltd claimed that Net Metering had been implemented to support the state’s infant solar industry. However, now that solar technology has reached grid parity, the DISCOMs are facing a significant financial strain due to the continued use of the “net metering” system. This is primarily caused by variables such as price variations between peak and off-peak hours, low demand during off-peak hours that results in power surrender, and payment of fixed fees. Furthermore, KSEB Ltd anticipates a significant increase in capacity thanks to several renewable energy initiatives, including the SOURA subsidy scheme.

Issue No.2: Settlement of Excess Energy at Average Pooled Power Purchase Cost

According to Kerala State Electricity Regulatory Commission (KSERC) (Renewable Energy and Net Metering Regulations), 2020, the distribution licensee must pay for the excess energy that prosumers and captive consumers have banked at the end of the settlement period at the licensee’s average pooled power purchase cost (APPC), as determined by the Commission from time to time. The Commission has approved an APPC of Rs.3.22/unit for the fiscal years 2021–2022. When compared to the current rate of solar electricity, this rate is noticeably higher.

Decision Of The State Commission

The following is what the Commission orders after reviewing the petition submitted by KSEB Ltd to request changes to the KSERC (Renewable and Energy and Net Metering) Regulations, 2020, as well as the concerns and remarks of the various stakeholders regarding the provisions of the Electricity Act, 2003, and the Electricity (Right of Consumers) Amendment Rules 20210.

• The Electricity (Right of Consumers) Amendment Rules, 2021, notified on 28.06.2021, include provisions for “net-billing or net-feed-in” and “gross-metering scheme,” which the KSEB Ltd. first requested to implement. This request is now denied.
• The second plea of the KSEB Ltd to grant Rs.2.44/unit for paying the excess energy banked for the settlement period beginning on October 1, 2021, and ending on September 30, 2022, is also denied.

The state commission noted the feedback of multiple stakeholders and consumers while arriving at its decision. But a key factor was the fact that KSEB is asking for relief even before even reaching it’s RPO targets. Thus, for it to talk about ‘saturation’ or ‘excess solar’ was far fetched. The commission also noted the need to support investments into solar in the state, and to that extent  the deleterious effect a gross metering/net billing regime would have.  Readers can view the full order against  Kerala State Electricity Board (KSEB)  with full  here.