The Kerala State Electricity Board (KSEB) has been authorised by the state power regulatory commission to procure 200 megawatt (MW) of additional power for one year at the rate of Rs 5.96 per unit, a move intended to ease acute supply pressure.

The approval covers supply until July 14, 2027, and will provide round the clock delivery from three firms. The decision follows a period of power regulation during peak hours caused by a shortfall of 500 megawatt (MW).

Although the new agreement will not eliminate regulations entirely, it is expected to reduce reliance on the real time market and the day ahead market where prices have been exorbitant. The board has been purchasing additional power from the real time market on a daily basis at around Rs 9.46 per unit to meet demand. Officials indicate that KSEB still requires 300 megawatt (MW) more capacity to lift restrictions fully and has floated three tenders that are under processing.

Consumption on Friday stood at 91.41 million units (mn units) while internal generation contributed 25.35 million units (mn units), underscoring the gap between demand and supply. The board has increased generation at hydel power projects, but water storage in reservoirs remains low at 28.31 per cent. The additional contracted supply will therefore temper the need to buy high priced short term power and provide breathing space for reservoir management.

Market observers note that the new arrangement will cut exposure to volatile intraday rates and give the board time to finalise longer term procurement. KSEB officials continue to monitor demand trends through the monsoon and may adjust procurement plans as reservoir inflows become clear. The measure is a temporary relief but is intended to stabilise supply and limit the financial burden from emergency purchases.