THIRUVANANTHAPURAM: The Kerala State Electricity Board (KSEB) will begin collecting fuel surcharge on a monthly basis—a shift from the earlier practice of occasional or quarterly levies.
KSEB will implement the monthly basis collection of fuel surcharge starting with the electricity bills issued in June 2025, KSEB said in a statement issued on May 27.
This is the first time KSEB will be using the automatic monthly recovery route, making the process more predictable and manageable both for the utility and for consumers.
While the amount might seem small—just a few paise per unit—it helps the utility avoid cash flow crunches due to rising input costs and prevents the burden of larger adjustments later.
The move follows a recent amendment by the Kerala State Electricity Regulatory Commission (KSERC), which now allows power distribution licensees to automatically adjust fuel costs each month, subject to a ceiling.
What is fuel surcharge?
The fuel surcharge, also known as fuel cost adjustment (FCA), is a variable charge added to electricity bills to compensate for fluctuations in the cost of fuel—like coal, gas, or oil—used in power generation.
Since fuel prices are volatile and affect generation costs, utilities are allowed to recover this additional expense from consumers periodically.
How It Worked Earlier
Until now, KSEB used to levy fuel surcharge less frequently, usually once a quarter or even after a longer lag, and only after approval from the regulator (KSERC).
This delay often resulted in the accumulation of unrecovered expenses, sometimes leading to one-time surcharges that were steep and drew public criticism.
What’s changing now
With the First Amendment to the KSERC Tariff Regulations, 2023, the Commission has allowed KSEB and other distribution licensees to determine and recover fuel surcharge monthly, using a formula specified in the regulations.
The surcharge will be up to 10 paise per unit, with any excess carried forward for up to six months.
The surcharge will be automatically included in the bills without seeking fresh approval each time, as long as it stays within the formula and cap, the KSEB notification added.
For April 2025, KSEB has calculated a fuel surcharge of Rs12.39 crore. Accordingly, the monthly billed consumers will pay 5 paise per unit in their June 2025 bills.
Likewise, the bimonthly billed consumers will be charged 7 paise per unit, based on an average formula prescribed by KSERC.
Exemption
However, the surcharge will not apply to the domestic consumers with a connected load of up to 1000 watts and monthly usage of up to 40 units.
It also will not apply to consumers opting for the green tariff, for the portion of power sourced from renewable energy.
