On August 25, 2026, the Kerala State Electricity Regulatory Commission (KSERC) issued the “Draft Kerala State Electricity Regulatory Commission (Multi Year Tariff) Regulations, 2026.” This regulatory framework is designed to govern the state’s electricity sector for the five-year control period beginning April 1, 2027. The primary objectives of the draft include enhancing sector efficiency, increasing accountability, and ensuring that cost reductions and efficiency gains are passed directly to consumers.
Control Period and Regulatory Scope
The new regulations establish a “Five-Year Control Period” running from April 1, 2027, to March 31, 2032 (FY 2027-28 through FY 2031-32). These regulations will succeed the existing 2021 framework, which is scheduled to expire at the conclusion of the 2026-27 financial year.
The scope of this regulatory framework encompasses the following sectors:
- Generation
- Transmission
- Distribution
- State Load Despatch Centre (SLDC)
The draft formally recognizes “Energy Storage System Developers (ESSDs)” as a new class of regulated entities, covering Battery Energy Storage Systems (BESS), Pumped Storage Projects (PSPs), and other storage technologies.
Revised Benchmark-Based O&M Methodology
The draft proposes a shift in the determination of Operation and Maintenance (O&M) costs for transmission and distribution utilities. The commission intends to replace the current flat-escalation system with a normative and benchmark-based approach.
This methodology is aligned with the Central Electricity Authority (CEA) O&M norms for distribution utilities and incorporates:
- Business growth metrics.
- Actual Consumer Price Index (CPI) indices.
- Wholesale Price Index (WPI) indices.
This transition aims to align utility expenses with infrastructure growth and actual inflationary trends.
Technical Framework for Energy Storage Systems (BESS and PSP)
The regulations introduce a technical and financial framework for energy storage focusing on operational efficiency and grid stability.
Efficiency Benchmarks and Performance Incentives
The commission has set normative cycle-efficiency benchmarks at 85% for Battery Energy Storage Systems (BESS) and 75% for Pumped Storage Projects (PSPs).
A performance-linked incentive of 20 paise per kWh is proposed for energy supplied in excess of these normative levels. For both BESS and PSPs, this incentive is contingent on monthly performance; it is only payable if the energy discharged (for BESS) or supplied (for PSPs) during a month remains at or above the respective 85% or 75% threshold.
Charging Arrangements
Beneficiaries of the storage systems are responsible for arranging the electricity required for charging or pumping. This arrangement must account for applicable transmission and distribution losses up to the storage system busbar. In exchange, beneficiaries are entitled to energy during peak hours equivalent to the specified normative efficiency of the charging power provided.
Grid Requirements and Inverter Standards
The draft mandates that upcoming BESS projects deploy grid-forming (GFM) inverters. These requirements align with the Central Electricity Authority’s 2026 amendment regulations regarding technical standards for BESS and renewable energy plants. GFM systems must be capable of stable operation in weak-grid conditions, specifically where the short-circuit ratio (SCR) is 2.0 or lower at the point of interconnection, providing autonomous frequency and voltage support.
Key Technical Takeaways
- Five-Year Control Period: Regulations apply from April 1, 2027, to March 31, 2032.
- 85% BESS & 75% PSP Efficiency Marks: Establishes normative cycle-efficiency benchmarks for battery and pumped storage.
- 20 Paise Performance Incentive: Financial rewards for energy supplied above normative efficiency, provided monthly thresholds (85% for BESS; 75% for PSP) are maintained.
- Shift to Normative O&M: Moves from flat-escalation to benchmark-based O&M cost determination aligned with CEA distribution norms.
- Grid-Forming Mandate: Requirement for GFM inverters in new BESS projects to handle an SCR of 2.0 or lower, per CEA 2026 standards.
- ESSD Classification: Formally recognizes Energy Storage System Developers as a regulated class.
- Collective Storage Options: Permits community or collective energy storage arrangements between consumers, prosumers, and distribution licensees.
Stakeholder Consultation and Public Submission Guidelines
KSERC has initiated a public consultation process. Stakeholders must adhere to the following timeline and requirements:
- Registration Deadline: Stakeholders wishing to participate must register by September 18, 2026. Registration is required for both those intending to present oral objections and those who wish to attend as “view only” observers.
- Written Submission Deadline: Comments and suggestions must be submitted by September 25, 2026, by 5:00 PM.
- Submission Channels: Written submissions may be sent via email to kserc@erckerala.org or by post to the Secretary, KSERC, KPFC Bhavanam, C.V. Raman Pillai Road, Vellayambalam, Thiruvananthapuram – 695 010.
- Public Hearing Schedule: Scheduled for September 29 and September 30, 2026.
- Forenoon Session: 10:30 AM – 12:30 PM
- Afternoon Session: 2:30 PM – 4:30 PM
- Venue: Hearings will be held at the Court Hall of the Commission, KSERC, KPFC Bhavanam, Vellayambalam, Thiruvananthapuram. Online participation via video conference is also available for registered participants.
- Help Desk: For registration queries, the Commission can be reached at 0471-2735544 during office hours.
Official References & Regulatory Filings
- Kerala State Electricity Regulatory Commission (KSERC) Document: Draft KSERC (Multi-Year Tariff) Regulations, 2026 – Stakeholder Consultation & Registration[1][2] Issuing Authority: Kerala State Electricity Regulatory Commission, Thiruvananthapuram[1][3] Details: Official portal for stakeholder registration, consultation process schedules (29.09.2026 & 30.09.2026), and submission of comments/objections on the draft MYT framework for the 2027–2032 control period[1].
- Kerala State Electricity Regulatory Commission (KSERC) Document: Draft KSERC Tariff Regulations & Official Statutory Notices[6][7] Issuing Authority: Kerala State Electricity Regulatory Commission, Thiruvananthapuram (Ref No. 3228/Con.Engg/2023/KSERC)[7] Details: Official gazette notification and regulatory draft setting normative benchmarks, BESS/PSP efficiency standards, O&M cost calculation methodologies, and grid connectivity standards[7].
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