KSEB Fuel Surcharge: New Monthly Rules and the RA Surcharge
If you have noticed a surcharge of a few paise per unit on your electricity bill and wondered where it comes from, the rules behind it are about to change. KSERC has notified new tariff regulations that rewrite the KSEB fuel surcharge from 1 April 2027 and add a separate surcharge to clear an old revenue gap. Here is how each works, who is exempt, and what to look for on your bill.
Quick answer: KSERC's Multi Year Tariff Regulations, 2026, notified on 16 October 2026, bring a new monthly fuel and power purchase surcharge from 1 April 2027. Up to 4% passes to bills automatically, plus 90% of anything above that. A separate regulatory asset surcharge runs from 2027-28 to 2030-31, at rates not yet fixed.
What KSERC's new tariff regulations change for Kerala homes
- KSERC notified the Multi Year Tariff Regulations, 2026 on 16 October 2026 (Notification No. 1010/Con.Engg/2026/KSERC).
- They set the tariff rules for five financial years, from 1 April 2027 to 31 March 2032 (Regulation 2.1).
- A monthly Fuel and Power Purchase Cost Adjustment Surcharge (FPPAS) takes over from the present fuel surcharge formula on 1 April 2027 (Regulations 1.2 and 58).
- Domestic connections with a connected load up to 1,000 watts that use up to 40 units a month are exempt from it (Regulation 58.2).
- A Regulatory Asset (RA) surcharge will recover an old revenue gap in four yearly instalments from 2027-28 to 2030-31 (Regulation 14.1).
- For homes, the RA surcharge will mix a rate per kW of connected load with a percentage of energy charges, at rates still to be fixed (Regulation 14.3).
KSERC published the draft on 24 August 2026 and held public consultations on 29 and 30 September before finalising it (explanatory note, paragraphs 20 and 21). Most of the regulations start when they are published in the Kerala Gazette, but the new surcharge rule and its formula in Annexure 3 start only on 1 April 2027 (Regulation 1.2). Your energy and fixed charges are set separately in KSERC's tariff orders; for today's rates, see current KSEB domestic tariff slabs and fixed charges.
How the KSEB fuel surcharge will be worked out from April 2027
KSERC says the FPPAS replaces the existing fuel surcharge formula and passes changes in fuel and power purchase costs to consumers automatically every month, subject to a yearly true-up (explanatory note, paragraph 12). KSEB calculates it with the formula in Annexure 3 and bills it every month (Regulation 58.3). The amount in a month's bill reflects the actual cost change for power bought two months earlier (Regulation 58.4). For example, a cost change in April would be billed in June.
KSEB must publish the proposed rate on its website within the first 25 days of the month that follows the purchase month, together with the detailed calculation and supporting data, certified by its Chief Internal Auditor (Regulation 58.5). If final energy accounts from the grid bodies have not arrived by the 15th of that month, it publishes a rate on provisional figures. The rate is rounded to the nearest paise, and KSEB must also publish how much it collected in earlier months.
On the bill, the rate is shown in paise per unit (kWh) and counted separately from the normal tariff on the energy billed to you (Regulation 58.6). If you are billed every two months, the rate for a bill issued in a month is the average of the rates fixed for that month and the month before. The paise figure comes from a percentage worked out with the formula, multiplied by the Average Billing Rate in that year's tariff order, and it can be a charge or a refund (Regulation 58.8). Solar homes should know how import, export and banked units appear on a solar bill.
How much can be added to your bill automatically each month?
There is a ceiling on what goes straight onto bills (Regulation 58.7). If the surcharge worked out for a month is 4% or less, all of it is recovered automatically. If it is more than 4%, KSEB recovers 4% plus 90% of the part above 4% in that month's bills, and the last 10% of that excess only if KSERC approves it in the annual true-up.
How Regulation 58.7 splits one month's surcharge.
| Surcharge worked out for the month | Recovered automatically on bills | Left for KSERC's annual true-up |
|---|---|---|
| 4% or less | All of it | Nothing |
| More than 4% | 4% plus 90% of the part above 4% | 10% of the part above 4% |
| The regulation's own example: 8% | 7.6% (4 + 0.9 × 4) | 0.4% |
To soften a sudden jump, KSEB may carry part of the surcharge into the next month, but only when the month's total is above 4%, for no more than two billing cycles, and it must be recovered within the same financial year (Regulation 58.9). If KSEB misses the monthly timeline, except in force majeure, it cannot push that cost into later months; it can only be considered at true-up (Regulation 58.4). If KSEB collects more than it should over the year, KSERC recovers the excess from KSEB with interest at true-up (Regulation 58.12).
Who is exempt, and what must your bill show?
The new surcharge applies to every consumer in Kerala except domestic consumers with a connected load of 1,000 watts or less and a monthly use of 40 units or less (Regulation 58.2). Both conditions must be met, so a small home that uses more than 40 units a month is not exempt. Connected load also drives other charges, as KSEB new connection charges by load shows.
Your bill must show the surcharge rate and the amount for that month as separate items (Regulation 58.14). KSEB must also put the formula, each month's calculation and the amount recovered on its website, and keep them archived on a dedicated portal (Regulation 58.15).
You can already see how the present surcharge is announced. KSEB's Fuel Surcharge page lists a notice for each month. The notice dated 22 August 2026 says the rate for July 2026 power purchase, collected in September 2026 bills, is 3 paise per unit on monthly bills and 2 paise on bi-monthly bills. The notice dated 26 February 2026 says the January 2026 surcharge was to be refunded in March 2026 bills. For example, a bi-monthly bill of 400 units issued in September 2026 would carry 400 × 2 paise = ₹8 as fuel surcharge.
What is the regulatory asset surcharge, and when does it start?
A regulatory asset is a revenue gap: the difference between the revenue requirement KSERC approved for a utility and the revenue its approved tariff is expected to bring in, carried forward to be recovered later with interest, called carrying cost. Central rules notified on 10 January 2024 require such a gap to be cleared in no more than seven equal yearly instalments (explanatory note, paragraph 4). Following Supreme Court orders of 6 August 2025 and 28 October 2025, KSERC's regulations require the gap to be cleared by 31 March 2031 (Regulation 14).
The regulatory asset as on 31 March 2024, including carrying cost and after amounts already allowed for recovery up to 31 March 2027, will be recovered in four equal instalments from 2027-28 to 2030-31 (Regulation 14.1). KSERC will fix KSEB's amount from the 2023-24 true-up and recover it through an RA surcharge in those four years (Regulation 14.2). The RA surcharge applies to consumers of every licensee in Kerala, not only KSEB's (Regulation 14.4).
How Regulation 14.3 says the RA surcharge will be billed.
| Type of consumer | How the RA surcharge is charged |
|---|---|
| Consumers billed on demand | A percentage of the tariff invoice, meaning demand charge plus energy charge |
| All other consumers, including homes billed on connected load | A rate per kW per month on connected load, plus a percentage of energy charges on billed energy |
The rate from 1 April 2027 will be decided by KSERC on a petition from KSEB (Regulation 14.3), so no amount is known yet. For example, a home with a 5 kW connected load would pay the per-kW part on 5 kW every month, plus a percentage of its energy charge. For how fixed charges already work on solar homes, see the two fixed charge options for solar homes.
What KSEB must propose for the 2027-2032 tariffs
KSEB must file its tariff petitions for the new period, along with a true-up for 2025-26, by 30 November 2026 (Regulation 6.1). The petition must include monthly data on how much solar homes and captive users send to the grid and draw from it during solar and non-solar hours (Regulation 19.4(iii)).
- Domestic fixed charges based on recorded maximum demand, for use once the metering is ready, which KSEB must propose (Regulation 19.5).
- Time of Day rates for more consumer groups, with a rebate or lower rate for use during solar hours and a higher rate at peak hours (Regulation 19.6). For timing your use today, see when to run appliances on solar power.
- A tariff for peak-hour help from storage that people install for their own use, which KSEB may propose (Regulation 19.12). Read battery storage rules for hybrid inverters first if you plan a battery.
- A green tariff that lets consumers choose up to 100% renewable supply at a premium, which KSEB may propose (Regulation 19.13).
- A demand response programme with incentives for consumers who take part, which KSEB may propose (Regulation 19.11).
The same regulations also set the clock for those ToD rates from 1 April 2027, only on homes with a smart meter or a Time-of-Day meter: solar hours 8 am to 6 pm, peak 6 pm to 11:30 pm, and off-peak 11:30 pm to 8 am. Until then the current 6 pm to 10 pm peak stays. The actual rates still need a later KSERC tariff order. Today's multipliers are on our KSEB tariff slabs and ToD page.
None of these is a new rate yet. Each starts as a proposal, and only a tariff order can put it on your bill.
How can you have a say before new rates are fixed?
KSEB must publish an excerpt of its petition in newspapers, as KSERC's Conduct of Business Regulations require (Regulation 20.1). KSERC then has 120 days from admitting a complete petition to pass its order, after considering suggestions and objections from stakeholders, including the public (Regulation 20.2).
Once fixed, a tariff should not ordinarily change more than once in a financial year, except through the monthly surcharge (Regulation 21.1). If a licensee collects more than the approved tariff, it must pay the excess back to the people who paid it, with interest at the bank rate (Regulation 21.2). For solar billing, see how KSEB net metering works for Kerala homes.
Your checklist for the coming bills
- Find the surcharge line on your latest bill and note the rate and the amount.
- Keep your old bills so you can compare the surcharge line month by month.
- Note your connected load, which you will need when the new surcharge rates come out.
- Watch for KSEB's newspaper notice on its tariff petition and the hearing details.
- If you want to comment, follow the steps given in that notice.
- With rooftop solar, learn how to read your net meter display so you know your billed units.
- If a surcharge line looks wrong, ask KSEB for the calculation behind it.
Check this against your bill
FGE Solar can review your latest KSEB bill and tell you which system size is worth pricing.
Frequently Asked Questions
What is the fuel surcharge on a KSEB bill?
It is a per-unit charge, or sometimes a refund, that passes changes in power purchase costs on to consumers. KSEB publishes the rate month by month on its Fuel Surcharge page, for example 3 paise per unit on monthly bills in September 2026. From 1 April 2027 the FPPAS under Regulation 58 takes its place.
Will the new surcharge raise my electricity bill every month?
Not necessarily. It follows the actual change in fuel and power purchase costs two months earlier. It can be a charge in one month and a refund in another (Regulations 58.4 and 58.8). Above 4% in a month, part of it also waits for KSERC's yearly review.
Which homes do not pay the fuel and power purchase surcharge?
Domestic connections with a connected load of up to 1,000 watts that also use no more than 40 units in the month (Regulation 58.2). Every other consumer in Kerala pays it.
How much will the RA surcharge be for a house?
The amount is not fixed yet. KSERC will set it on a petition from KSEB for the period from 1 April 2027 (Regulation 14.3). For homes it will have a per-kW part based on connected load and a part that is a percentage of energy charges.
Does rooftop solar change what I pay in these surcharges?
The monthly FPPAS rate is applied to the energy billed to you, and the energy part of the RA surcharge is based on billed energy (Regulations 58.6 and 14.3). The per-kW part of the RA surcharge depends on connected load, not on your plant. Your billed units follow the accounting described in the import, export and banked-unit lines on a solar bill.
Can ordinary consumers object to KSEB's tariff petition?
Yes. KSERC must consider suggestions and objections from stakeholders, including the public, before it passes its order (Regulation 20.2). Watch for the petition excerpt that KSEB has to publish in newspapers.
Official Sources and Accuracy Note
- 01KSEB Fuel Surcharge downloads page (monthly fuel surcharge notices, PPA Cell/TRAC)
Notice list: 2026-08-22 entry 'computed rate for Fuel Surcharge for the month of July 2026 to be recovered during September 2026 is 3 paise for monthly and 2 paise for bi monthly'; 2026-02-26 entry 'January 2026 to.
govt source · opened 2026-10-18 - 02KSERC (Multi Year Tariff) Regulations, 2026, Notification No. 1010/Con.Engg/2026/KSERC dated 16 October 2026 (final regulations ZIP, English PDF 'MYT Tariff Regulations 2026.pdf')
Summary list: notification number and date on page 1; Reg 2.1 control period 1 April 2027 to 31 March 2032; Reg 1.2 proviso and Reg 58 FPPAS from 1 April 2027; Reg 58.2 exemption; Reg 14.1 four instalments; Reg 14.3.
govt source · opened 2026-10-18
Accuracy note: This guide is built from government pages, regulator orders, and news sources on the web. Rules and amounts change. Some details may be outdated or wrong. Check the official links below before you pay, apply, or complain to KSEB.