Maharashtra Approves Amended Energy Purchase Agreement for Two Wind Projects

The Commission has given TPC-D the freedom not to extend the EPA beyond its expiry

June 9, 2020

/ Wind

The Maharashtra Electricity Regulatory Commission (MERC) has approved the extension of an amended energy purchase agreement (EPA) between Tata Power Company Limited- Distribution (TPC-D) and its wind energy business Tata Power Company Limited – Wind (TPC-W).

Tata Power’s distribution business had filed a petition with the MERC seeking its approval for the extension of its EPA with TPC-W with amended terms and conditions. The EPA was for the power purchased from the 50.4 MW Khandke and 11.25 MW Bramanwel wind projects in Maharashtra.

On March 14, 2020, both TPC-D and TPC-W mutually agreed to extend the validity of the EPA before it expired and amended the original terms, conditions, and the duration of the agreement. Both projects are currently in their 13th year.

According to the amended agreement, the 13-year tariff period is set to end on December 14, 2020,for the Khandke Project and on May 8, 2020, for the Bramanwel project. Tata Power requested the Commission to approve this extension.

Though the Bramanwel and Khandke projects were commissioned on May 9, 2007, and December 15, 2007, respectively, the two entities executed the terms and conditions only on March 31, 2010, with the condition that validity will be renewed or extended.

“The Commission fails to understand as to why after commissioning of the projects in 2007, TPC-D executed the EPA in March 2010, and that too valid up to March 31, 2020, and not for the tariff period of 13 years as approved in Commission’s Wind Order, 2003,” the Commission observed in its order.

Upon analysis, the Commission noted that the TPC-D could choose not to extend the EPAs beyond its set expiry and procure power through competitive bidding instead. It added that this would also be much cheaper than the 13th year tariff of ₹5.30 (~$0.07)/kWh for these projects.

However, the Commission noted that the extension sought for the Bramanwel project was just for around a month and nine months for the Khandke project to maintain equity for all the wind EPAs in the state and also to be consistent with the provisions of the Commission’s Wind Order, 2003.

So, the MERC allowed for the extension of the terms of the EPA until the expiry of the 13th year as per the dates provided by TPC-D. It added that once the EPA expired, it would have to procure power from the projects only through competitive bidding.

Similarly, last year, the Maharashtra State Electricity Distribution Company Limited (MSEDCL) got the Commission’s approval for deviations in the standard bidding document for the long-term procurement of 500 MW of wind power. The approval was sought for wind projects for which the energy purchase agreements had expired or are about to expire in FY 2019-20.

In another similar case last year, the state Commission had directed MSEDCL to procure wind power through the competitive bidding route from wind power projects whose EPAs with MSEDCL had expired. In that order, the Commission had mentioned that as the wind generators had their EPAs with MSEDCL for the past several years and their projects were already commissioned, MSEDCL may take appropriate deviations from provisions of the competitive bidding guidelines with prior approval of the Commission.