MERC Asks DISCOM to Reduce ₹0.18/kWh from Solar Tariff to Account for Safeguard Duty

The Commission was responding to a petition filed by MSEDCL


The Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) should reduce ₹0.18 (0.0025/kWh) from the discovered tariff if the bidders have not paid the safeguard duty, the Maharashtra Electricity Regulatory Commission (MERC) has said in its latest order. It has also directed MSEDCL to submit the copy of invoices to demonstrate that the safeguard duty was paid by the bidders after the scheduled commercial operation date (SCOD).

The state commission was responding to a petition filed by the MSEDCL.

Earlier, MSEDCL had revised the ceiling rate from ₹3.10 (~$0.044)/kWh to ₹3.30 (~$0. 0.046)/kWh considering the impact of safeguard duty, distribution losses, and transmission wheeling charges.

Now, the bidders have asked the MSEDCL to increase the ceiling tariff because of the imposition of safeguard duty on import of solar panels. In reply, MSEDCL has informed the bidders that they must consider the safeguard duty impact while bidding.

The commission notes that the Ministry of New and Renewable Energy (MNRE) in a letter written to SECI has asked to fix the maximum tariff including safeguard duty in the RfS with the condition that, if it is later found that no safeguard duty has been paid by the bidder on the modules used in the project then the bid tariff will be reduced by ₹0.18 (0.0025/kWh).

MSEDCL has also asked the commission to approve the tariff for long term procurement and signing of power purchase agreement (PPA) with successful bidders for 180 MW solar power as discovered through competitive bidding.

MERC in its order has given its approval for signing the PPAs for 25 years as per the rates discovered through the competitive bidding process.

MSEDCL also asked the commission to make this power eligible for meeting its solar RPO requirement.

The commission has agreed to the MSEDCL’s plea and ordered that power procured from these projects will be counted towards fulfilment of its solar RPO for the respective periods.

MSEDCL has also revised the scheduled commercial operation date period from 13 months to 18 months.

In its reply, the commission says:

“Ministry of Power has amended its circular dated January 3, 2019 the commissioning schedule from 21 months to 15 months from the date of execution of PPA. Since the bidding process was completed before issuance of this amendment, the commission considers the commissioning schedule as per prevailing circular at the time of bidding and allows the revision in SCOD from 13 to 18 months.”

Recently, MERC ruled that the Ministry of Finance’s notification that imposed safeguard duty is an event of Change in Law, and therefore the additional expenditure and other impacts will be considered for reimbursement under Change in Law.

Image credit: Greenko