Maharashtra Regulator Takes a Lenient Stand on MSEDCL’s Wind Dues Considering COVID-19

The petitioner will be better served if the outstanding amount is cleared instead of penalizing MSEDCL, MERC noted

August 27, 2020


In a recent order, the Maharashtra Electricity Regulatory Commission (MERC) reiterated its decision to reject a wind generator’s claim for dues in the absence of a valid energy purchase agreement (EPA) and open access (OA) permission.

The MERC also directed the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to clear its dues with the generator and to include the reconciled outstanding amount in its request to financial institutions to pay the generator directly.

Case Background

Ghatge Patil Industries Limited (GPIL), a manufacturer of valves for the oil and gas industry, has 15 MW of wind projects in the state. It filed a petition with the Commission against MSEDCL for its non-compliance to the MERC’s earlier orders.

Last year, GPIL had filed a petition with the Commission to direct the MSEDCL to pay its outstanding dues, provide relief for denying its short-term open access (STOA) application, and to clear its outstanding dues for energy injected after the termination of its EPA.

In the previous order, the Commission had rejected GPIL’s claim for dues for energy injected after the termination of its EPA, stating that without an EPA or STOA, power should not have been injected into the grid. It explained the Commission had allowed for the termination of the EPA and that the MSEDCL’s rejection of the short-term open access application was correct and that the petitioner’s request for compensation could not be allowed.

In its present petition, GPIL contended that the DISCOM failed to comply with the Commission’s previous directives to reconcile the outstanding amount within the stipulated period. It sought the payment of outstanding delayed payment charges (DPC), interest on this amount, and payment for 4.17 million units (MU) of power injected into the grid between July 3, 2018, and July 31, 2018. The petitioner claimed outstanding dues to the tune of about ₹6 million (~$80,988).

MSEDCL contested that it had paid the entire principal outstanding and delayed payment charges until the date of termination of the EPA. The DISCOM also said that GPIL should not have injected power into its grid without a valid STOA or EPA and that it must be penalized for not maintaining grid discipline. The contested dues are summarized below:

Maharashtra DISCOM's Outstanding Dues to Wind Power Generator

Based on the submissions, MERC noted that MSEDCL had not agreed to the differential DPC of ₹424,000 (~$5,723) claimed by GPIL for the delay in receipt of payments. It added that MSEDCL has not submitted any justification for it and that this was not an appropriate move.

Regardless of this observation, the Commission said that GPIL did not raise the dispute regarding MSEDCL’s rejection of the claim in the original petition. Further, it said that this could not be dealt with under the present non-compliance proceeding. The MERC added that GIPL could approach the Commission for this matter under a different section of the Electricity Act so that the dispute can be dealt with separately.

The Commission also noted that delayed payment charges of ₹3.78 million (~$51,022) were computed during reconciliation by both parties, but the DISCOM did not pay this amount citing the lack of a provision in the EPA.

“Both parties have arrived at the same amount, but MSEDCL has not considered it for payment as EPA does not provide for it. In its reply, MSEDCL has not disclosed whether it has challenged this order before the APTEL. Such an approach of the MSEDCL towards compliance of the Commission’s Order is not acceptable,” the Commission stated.

The Commission admitted that it was unsure about what else the GPIL should do to get its dues or how the MSEDCL can be discharged from its liability due to this caveat. It explained that it would have penalized the DISCOM as per the Electricity Act, but it had to consider the adverse impact of the ongoing COVID-19 crisis on the DISCOM’s financial health. In light of this, the Commission said that it was giving MSEDCL one last chance to pay its dues as reconciled along with interest.

Maharashtra was among the ‘worst’ rated states for ease of payments by the DISCOMs.

MERC said it had taken note of MSEDCL’s submission that it had approached financial institutions to help it clear the outstanding payments. It had made arrangements so that renewable energy generators will be paid directly by the institutions without routing the payments through MSEDCL.

“Instead of penalizing MSEDCL, GPIL will be better served if the outstanding amount is paid to it as committed by MSEDCL,” the Commission commented.

In its final order, the Commission directed the MSEDCL to clear or include the reconciled outstanding amount in its proposal to financial institutions to pay GPIL directly.

It also reiterated its stance on the rejection of GPIL’s claim for payment towards energy injected without a valid EPA or open access permission.

In a similar order, MERC recently directed MSEDCL to reconcile differences in its outstanding dues with wind generators in the state and to pay them the total amount due along with late payment charges.

In July, Mercom reported that MERC dismissed a petition by a wind developer seeking the reconnection of disconnected wind projects and relief for power supplied without a valid energy purchase agreement.