The Maharashtra Electricity Regulatory Commission (MERC) has modified aspects of its multi-year tariff (MYT) order, revising time-of-day (ToD) banking rules and rationalizing the rebate structure to better align with regulatory principles and solar consumption patterns.

The Commission has clarified that banked energy can be drawn only within the same or lower tariff time block, and introduced a slot-wise framework under which energy banked during normal hours (00:00–06:00 and 06:00–09:00) can be used during normal and solar hours but not peak hours, solar-hour banking (09:00–17:00) is restricted to the same time block, and peak-hour banking (17:00–24:00) can be utilized across all time periods.

Under the revised ToD framework, there is no rebate or additional charge during normal hours from 00:00 to 06:00 and 06:00 to 09:00. During solar hours (09:00 to 17:00), a rebate of 15% applies from April to September and 25% from October to March, while peak-hour consumption (17:00 to 24:00) will attract a 20% premium.

For low tension residential consumers and high tension group housing societies, the Commission has specified a solar-hour rebate trajectory of ₹0.80 (~$0.0085)/kWh in financial year (FY) 2025-26, ₹0.85 (~$0.0090)/kWh in FY 2026-27, ₹0.90 (~$0.0096)/kWh in FY 2027-28 and FY 2028-29, and ₹1.00 (~$0.0106)/kWh in FY 2029-30.

The Commission has also removed the earlier ₹0.80 (~$0.0085)/kWh night-time rebate, aligning incentives more closely with daytime renewable energy availability.

These principles apply to net metering and net billing arrangements. Residential consumers are exempt from ToD-wise banking for rooftop renewable energy.

The revised tariff and banking provisions will apply from July 1, 2025, while the remaining elements of the MYT order will remain unchanged.

Background

The proceedings arise from a review petition filed by MSEDCL challenging multiple aspects of the MYT tariff order for the fourth and fifth control periods.

The Commission had initially issued its MYT order, followed by a review order on June 25, 2025. The Bombay High Court subsequently set aside the review order and remanded the matter to the Commission with directions to conduct a fresh process with stakeholder consultation. The Supreme Court upheld the remand and directed the Commission to decide the matter within a specified timeline, which was later extended.

Pursuant to these directions, the Commission conducted public consultations and hearings across Maharashtra and received approximately 2,000 suggestions and objections from stakeholders.

MSEDCL raised multiple issues in its petition. It argued that capital expenditure associated with programs already approved or submitted had been erroneously excluded, resulting in an underestimation of allowable costs. It also raised concerns regarding depreciation calculations, including the treatment of assets funded through consumer contributions and grants.

The utility sought additional return on equity for its wires business, contending that the Commission had incorrectly linked such incentives to factors outside the prescribed regulatory framework. It also challenged the methodology used to estimate agricultural consumption and technical losses, stating that reliance on limited sample data had distorted energy balance and cross-subsidy calculations.

MSEDCL also sought recognition of approximately ₹117.51 billion (~$1.24 billion) in liabilities arising from subsequent judicial and regulatory orders. It, however, held that these claims were not admissible in the present proceedings as they arose after the MYT order and the filing of the review petition, and granted liberty to MSEDCL to approach the Commission separately for their recovery.

Stakeholders raised a wide range of concerns. Industrial consumers opposed any revision in agricultural sales that could increase their tariff burden. Consumer groups raised concerns about kVAh-based billing and its impact on fairness and energy efficiency. Renewable energy stakeholders raised objections to banking provisions, time-of-day restrictions, and grid-related charges.

Commission’s Analysis

The Commission examined the petition under Regulation 28 governing its review jurisdiction, while also noting that it possesses inherent powers to amend the tariff after following due process.

It observed that the present proceedings were conducted in compliance with judicial directions, including full public consultation, and that the issues raised by MSEDCL could therefore be evaluated on merits within this framework.

On capital expenditure, the Commission accepted MSEDCL’s contention that certain programs had been wrongly excluded in the MYT order. It approved capitalisation for previously disallowed programs, including those already granted in principle approval. It addressed additional capex components, including grant-funded and projected programs, in its revised determination.

On the issue of depreciation, the Commission examined the issues raised by MSEDCL regarding the calculation methodology and the treatment of assets funded through grants and contributions. The order reflects issue-specific determinations rather than a blanket acceptance or rejection of all depreciation claims.

The Commission also addressed the estimation of agricultural sales as a substantive issue. It considered stakeholder objections and MSEDCL’s submissions regarding loss assumptions, feeder level data, and methodology. It adjudicated the issue in the latter part of the order rather than treating it as outside the scope of review.

Regarding return-on-equity, the Commission did not allow additional return-on-equity for the wires business, noting that its earlier approach was consistent with tariff principles and that related matters are subject to appellate proceedings. However, the treatment of other financial components was adjusted where justified.

A key aspect of the order relates to the banking of renewable energy. The Commission held that its earlier MYT order was not consistent with the Distribution Open Access Regulations and therefore required correction. It reaffirmed that banking must follow the regulatory principle that energy can be drawn only within the same or lower tariff time block. It then aligned this principle with the revised ToD structure.

The state regulator also clarified that these principles apply to net metering and net billing arrangements. Residential consumers are exempt from time-of-day slot-wise banking for rooftop renewable energy.

It also examined other issues raised by stakeholders, including kVAh billing and time-of-day tariffs. It noted that kVAh-based billing had been introduced through earlier tariff orders as part of a phased regulatory approach and does not constitute an apparent error warranting review.

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