The Karnataka Electricity Regulatory Commission (KERC) has issued a new order on the Average Pooled Power Purchase Cost (APPC) for the state’s electricity supply companies (ESCOMs), aiming to balance past cost adjustments and provide clarity for the upcoming financial year. The order, dated April 7, 2026, focuses on finalizing the actual costs for FY 2024-25 and setting a provisional benchmark for FY 2026-27 to support stability in the renewable energy sector.
Earlier, the Commission had fixed a provisional APPC of ₹5.54 per unit for FY 2025-26. However, after ESCOMs completed their financial accounts for FY 2024-25, the actual average pooled cost was found to be higher at ₹6.73 per unit. This difference has triggered a truing-up process, which is a standard regulatory mechanism used to reconcile provisional tariffs with actual costs.
Under the existing regulatory framework, including the Seventh Amendment to the Renewable Energy (RE) Regulations, renewable energy generators operating under the Renewable Energy Certificate (REC) mechanism are paid based on a “lower of” formula. They receive either the pooled power purchase cost or 75 percent of the generic tariff determined for their specific technology, whichever is lower.
Since the actual APPC of ₹6.73 per unit is higher than the provisional ₹5.54 per unit, ESCOMs have effectively underpaid renewable energy generators during FY 2025-26. To address this, the Commission has directed ESCOMs to settle the difference between the earlier payments and the revised eligible amount. To ease the financial burden, these payments for energy supplied between April 1, 2025, and March 31, 2026, will be made in three equal installments.
For the upcoming financial year 2026-27, KERC has set a provisional APPC of ₹6.73 per unit, effective April 1, 2026. This rate will serve as an interim value until the actual power purchase data for FY 2025-26 is finalized. During FY 2026-27, ESCOMs will continue to pay renewable energy generators under the REC mechanism using the same “lower of” principle.
The order was passed by a commission panel led by the chairman, along with the member (legal) and the member. The decision provides clarity to both utilities and renewable energy developers by aligning payments with actual market costs while continuing the policy support offered through the REC framework. All figures for FY 2026-27 will be subject to further revision once final data is available at the end of the financial year.
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