The Karnataka Electricity Regulatory Commission (KERC) has issued draft regulations to govern the grant of transmission licenses for intrastate projects awarded through competitive bidding, laying down a detailed framework covering licensing procedures, tariff adoption, and operational obligations.

The Commission has invited feedback on the draft regulations within 15 days.

Background

The draft regulations come in the backdrop of Karnataka’s push to expand its transmission network through competitive bidding in line with the Ministry of Power guidelines.

The state government has designated REC Power Development and Consultancy (RECPDCL) as the bid process coordinator to implement the bidding process.

The Commission observed that while the existing KERC (Licensing) Regulations, 2004, govern transmission licensing, they do not specifically address projects developed through competitive bidding.

To bridge this gap, the draft regulations introduce a dedicated framework for such projects.

Under the proposed rules, only entities selected through competitive bidding under Section 63 of the Electricity Act will be eligible for licenses. The Commission will adopt tariffs determined through the bidding process rather than set them independently.

Commission’s Analysis

The Commission has emphasized transparency, regulatory discipline, and alignment with national policy.

The draft framework mandates a structured licensing process, including public notices, stakeholder consultations, and scrutiny of applications by the State Transmission Utility prior to license issuance.

The proposed regulations also establish clear eligibility criteria, limiting licenses to entities selected through competitive bidding to ensure fairness and consistency with national guidelines.

Transmission licenses are proposed to be valid for 25 years, with provisions for renewal, amendment, and revocation in case of non-compliance or financial distress.

The regulator has laid down operational obligations requiring licensees to execute projects efficiently, maintain system availability, comply with grid standards, and provide non-discriminatory open access to users.

The transmission licensee should provide open access to its transmission system for use by a distribution licensee, an electricity trader, a generating company, a bulk consumer, or any other person in accordance with the prevailing regulations.

The draft proposes that an entity that has been issued a transmission license should apply to renew the license for a term beyond 25 years at least two years before the initial license period expires. However, the Commission may renew the license for a period shorter than 25 years after reviewing the merits of the case.

The tariff framework mandates the adoption of competitively discovered tariffs under Section 63 and ensures that subsequent network modifications do not alter the originally agreed charges.

In 2024, KERC clarified that if additional solar or wind capacity is added to an existing co-located wind-solar hybrid power project, transmission charges will not exceed the capacity contracted with the transmission licensee, provided the total installed capacity is within the contracted limits.

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