Draft KERC (Fee) (First Amendment) Regulation 2026 – EQ

Summary:

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## Key Business & Financial Details

| Parameter | Existing Provision | Proposed Amendment |
|———–|——————-|——————–|
| **Annual License Fee – Other Transmission Licensees** | ₹1,00,000 per MW (or part thereof), min ₹20 Lakhs per annum | **Flat ₹20 Lakhs per annum** (regardless of MW capacity) |
| **Fee for Adoption of Transmission Tariff Application** | Not specified (new clause) | **₹25 Lakhs per application** (under Section 63 of the Act) |
| **Effective Date** | – | Date of publication in official gazette |
| **Public Comment Period** | – | 15 days from publication in official gazette |

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## Rationale for Amendment (as per Preamble)

1. Karnataka is now executing **Intra-State Transmission Projects** through **Tariff Based Competitive Bidding (TBCB)** as per MoP guidelines.
2. Under these guidelines, KERC’s role includes:
– Granting **Transmission License** (under Sections 14, 15, 86(1)(d) of the Electricity Act) to the successful **Special Purpose Vehicle (SPV)** .
– **Adoption of Transmission Charges** (tariff) determined through competitive bidding.
3. Existing KERC (Fee) Regulations, 2024 did not provide for:
– A clear annual fee structure for TBCB-based transmission licensees.
– Any fee for **tariff adoption applications** under Section 63.
4. Hence, this amendment is required to enable KERC to collect appropriate fees for these new regulatory functions.

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## Detailed Clause-by-Clause Amendment

### Clause 1(i)(b) – Annual License Fee for “Other Transmission Licensees”

| Existing Text | Proposed Text |
|—————|—————|
| Other Transmission Licensees: – Rs. 1,00,000/- per MW or part thereof of Transmission Capacity subject to a minimum of Rs. 20 lakhs per Annum. | Other Transmission Licensees: – **Rs. 20 Lakhs per Annum.** |

**Business Impact:**
– **For large transmission projects** (e.g., >20 MW): Significant fee reduction.
– Example: 100 MW project → Existing fee = ₹1 Cr; Proposed = ₹20 Lakhs (80% lower).
– **For small projects** (<20 MW): Fee remains at ₹20 Lakhs (same as existing minimum).
– **Predictability** – Flat fee simplifies budgeting and compliance.

### New Clause 7(a) – Fee for Application for Adoption of Transmission Tariff

| New Clause | Fee |
|————|—–|
| Fee for Application for Adoption of Transmission Tariff: – An application for adoption of Transmission Tariff filed under Section 63 of the Act shall be accompanied by a fee of **Rs. 25 Lakhs**. | ₹25 Lakhs per application |

**Business Impact:**
– Any transmission SPV selected through TBCB must pay **₹25 Lakhs** when seeking KERC’s adoption of the discovered tariff.
– This is a **one-time fee per application** (not annual).
– Comparable to similar fees in other states (e.g., CERC charges ₹20-30 Lakhs for tariff adoption petitions).

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## Stakeholder Participation

| Item | Detail |
|——|——–|
| **Interested parties** | Transmission developers, SPVs, utilities, power consumers, legal firms, industry bodies |
| **Action required** | Submit views / comments / objections / suggestions on draft amendments |
| **Time limit** | **15 days** from date of publication in official gazette |
| **Where to send** | Secretary, KERC, No.16, C-1, Miller Tank Bed Area, Vasanthanagar, Bengaluru – 560052 |
| **Notification reference** | No. DD(Tariff)/2025-26/Fees/1802 dated 23 March 2026 |

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## Business Implications

### For Transmission Developers / SPVs (Winning Bidders in TBCB)
– **Lower annual license fee** – reduces operational cost.
– **New upfront cost** – ₹25 Lakhs for tariff adoption application. Factor this into bidding model.
– **Clear regulatory path** – amendment removes ambiguity on fees payable to KERC.

### For Existing Transmission Licensees (Non-TBCB)
– If you are already paying based on per-MW slab, you may benefit from switching to flat ₹20 Lakhs (if your capacity >20 MW). Check if amendment applies to all or only new TBCB licensees.

### For State Power Utilities / CTU / STU
– **Simpler administration** – no need to calculate per-MW fees for TBCB licensees.
– **Cost recovery** – KERC will collect adequate fees to cover regulatory expenses for tariff adoption.

### For Legal & Advisory Firms
– Opportunity to **represent clients** in submitting comments during the 15-day window.
– Assist TBCB bidders in understanding total regulatory costs (license + tariff adoption fees).

### For Consumer Groups / Industry Bodies
– Monitor whether fees passed through to tariffs. ₹25 Lakhs is a modest one-time cost – unlikely to materially impact consumer tariffs.

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## Strategic Recommendations

| Stakeholder | Recommended Action |
|————-|——————–|
| **Potential TBCB bidders** | Include ₹20 Lakhs/year + ₹25 Lakhs (one-time) in financial model. Submit comments if fees appear excessive. |
| **Existing transmission licensees** | Clarify with KERC whether amendment applies to existing licensees or only new TBCB licensees. If applicable, seek fee reduction. |
| **Legal consultants** | File representations within 15 days of gazette publication – suggest clarity on whether ₹25 Lakhs is per project or per application (e.g., if multiple tariff adoption requests). |
| **KERC** | Ensure final regulation defines “Other Transmission Licensees” to avoid ambiguity (does it include STU, CTU, or only private TBCB licensees?). |

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