Kerala State Electricity Board urged to form dedicated team to explore electricity futures market

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As Keralam grapples with peak-hour power shortages and scours the market for additional electricity supplies, the Kerala State Electricity Regulatory Commission has advised the Kerala State Electricity Board (KSEB) to explore the possibilities in the exchange-traded electricity futures market.

The commission consisting of chairperson T.K. Jose and member B. Pradeep has directed the chairman and managing director, KSEB to constitute a small dedicated team to explore the electricity futures market “so that the volatility and price risks of short-term market including exchanges can be hedged to a certain extent in the future.”

Exchange-traded electricity futures market was introduced in India in July 2025 through a joint regulatory effort by the Securities and Exchange Board of India (SEBI) and the Central Electricity Regulatory Authority (CERC).

Electricity futures are financial contracts that permit power producers, distribution companies, industries and traders to lock in prices for future electricity delivery. Power generators will be able to lock in the selling price of their future output. Distribution companies can buy electricity at predictable prices, thereby reducing losses. Such contracts complement physical power trading by adding a layer of financial flexibility, according to SEBI.

“Electricity is actively traded on major commodity derivatives platforms like multi commodity exchange (MCX) and National Stock Exchange. Participating in the futures market allow Discoms to hedge against the risks and volatility of the price variations in electricity market in the exchanges such as Indian Energy Exchange (IEX), Power Exchange India Limited (PXIL) and Hindustan Power Exchange (HPX). However, KSEB is yet to participate in the futures market,” the State Commission noted in an October 29 order on a KSEB plea for making additional power purchases for the period up to April 2027.

In its multi-year tariff regulations for the five-year period starting 2027-28 also, the commission had asked the KSEB to explore evolving market products including futures market in electricity.

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