The Kerala State Electricity Regulatory Commission (KSERC) has upheld Kerala State Electricity Board’s (KSEBL) levying fixed charges on domestic solar prosumers under net-metering arrangements.

The order clarified that there is no illegality in KSEBL’s current billing practice of collecting fixed charges based on total consumption, which includes grid imports, self-generation consumed at the premises, and banked energy.

The Commission, however, introduced an alternative option for consumers to pay fixed charges based on connected load and directed KSEBL to complete a review of security deposits within one month.

Background

The case was initiated by six domestic rooftop solar prosumers, led by petitioner Jameskutty Thomas, who approached KSERC on July 24, 2025. The petition challenged the legality of KSEBL’s fixed charge methodology and its retention of higher security deposits from prosumers.

The petitioners argued that rooftop solar installations are captive generating units under Section 9 of the Electricity Act, 2003, and self-consumption should not attract fixed charges, since the licensee has no role in generating or supplying that energy.

They alleged that KSEBL had, in 2022, shifted to levying fixed charges on total consumption rather than only on grid imports, thereby inflating monthly charges and deposits.

The petitioners also contended that KSERC’s Renewable Energy and Net-Metering Regulations, 2020, require billing on net electricity consumption, not gross consumption.

They pointed to Regulation 21(3) to support their claim that fixed charges should apply only to the net energy supplied by the licensee.

Regarding security deposits, they argued that, under Regulations 67 and 73 of the Kerala Electricity Supply Code, 2014, deposits should be based on two months of average billed consumption.

Since prosumers’ bills had reduced following rooftop generation, KSEBL was required to review and refund excess deposits, which had not been done.

In its defense, KSEBL cited tariff orders, beginning with the 2019 order and reaffirmed in the 2024 tariff order, which allowed fixed charges to be linked to total consumption.

The utility maintained that prosumers are consumers who continuously use the distribution system for imports during non-solar hours and for exports and banking during solar hours.

KSEBL noted that fixed charges serve as a recovery mechanism for network costs, which account for nearly 64% of its annual revenue requirement, of which only 20%–30% is currently recovered through existing fixed charges.

Regarding deposits, the utility argued that adequacy must be calculated based on total consumption, as prosumers could rely entirely on the grid if their solar systems failed.

Commission’s Analysis

The Commission examined the evolution of solar policy, the statutory framework under the Electricity Act, 2003, and the scope of its own Renewable Energy and Net-Metering Regulations.

The Commission concluded that domestic prosumers without storage facilities remain consumers under the Act and continuously use the distribution system. Citing Sections 43, 45, and 47, it held that recovery of fixed charges for capacity and network costs is legally valid.

The Commission clarified that its renewable energy regulations only govern energy accounting and banking and do not exempt prosumers from fixed charges.

KSERC rejected the argument that fixed charges should apply only to imports, holding instead that levying them on total consumption was consistent with tariff orders. At the same time, it introduced a choice for consumers.

Under Option 1, prosumers can continue to pay fixed charges based on total consumption as per the tariff order of December 5, 2024. Under Option 2, they may opt to pay a fixed charge of ₹47 (~$0.53)/kWh/month on the total connected load, provided they notify KSEBL at least one month in advance.

The regulator directed the utility to review the adequacy of deposits within one month of the order, refund any excess deposits in accordance with Regulation 73(3), and seek additional amounts with due notice if shortfalls are found.

Recently, the KSERC approved the Kerala State Electricity Board’s proposal to establish a 125 MW/500 MWh battery energy storage system at four substations.

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